Krugman Textbook Chapter 8

Question 1

Employment

Answer 1

The total number of people aged 15 and older currently employed for pay in the economy, either full time or part time.

Question 2

Unemployment

Answer 2

The total number of people aged 15 and older who are actively looking for work but aren’t currently employed.

Question 3

Labour Force

Answer 3

The sum of employment and unemployment.

Question 4

Labour Force Participation Rate

Answer 4

The percentage of the population aged 15 and older that is in the labour force.

Question 5

Unemployment Rate

Answer 5

The percentage of the total number of people in the labour force who are unemployed.

Question 6

Discouraged Workers

Answer 6

Individuals who want to work but who have stated to government researchers that they aren’t currently searching for a job because they see a small chance of finding one in the current job market state.

Question 7

Marginally Attached Workers

Answer 7

Individuals who would like a job and have looked for one in the past, but are not currently searching for one.

Question 8

Underemployment

Answer 8

The number of people who have jobs that, in certain ways, fall short of what they want.

Question 9

Visible Employment

Answer 9

The number of people who involuntarily work part-time because they cannot find full time work.

Question 10

Invisible Employment

Answer 10

The number of people who have jobs that do not fully use their skills or that have one or more qualities that are less than desired, like low pay.

Question 11

Jobless Recovery

Answer 11

A period where the real GDP growth rate is positive, but the unemployment rate is still rising.

Question 12

Job Search

Answer 12

When workers spend time looking for employment.

Question 13

Frictional Unemployment

Answer 13

Unemployment due to time that workers spend looking for employment.

Question 14

Structural Unemployment

Answer 14

Unemployment due to people seeking jobs in a particular labour market where there aren’t enough jobs at the current wage rate for the amount of people searching, even when the economy is at the peak of its business cycle.

Question 15

Efficiency Wages

Answer 15

Wages that employers set above the equilibrium wage rate as an incentive for workers to perform their jobs better.

Question 16

Natural Rate of Unemployment

Answer 16

The unemployment rate that arises from the effects of frictional and structural unemployment.

Question 17

Cyclical Unemployment

Answer 17

The difference between the actual rate of unemployment and the natural rate of unemployment due to downturns and upturns in the business cycle.

Question 18

Real Wage

Answer 18

The wage rate divided by the price level.

Question 19

Real Income

Answer 19

Income divided by the price level.

Question 20

Shoe-Leather Costs

Answer 20

The increased costs of transactions caused by inflation. Called this because of the footwork caused by running to and from locations to get rid of money.

Question 21

Menu Costs

Answer 21

The real cost of changing a listed price.

Question 22

Unit-of-Account Costs

Answer 22

Costs that are caused by the way inflation makes money a less reliable unit of measurement.

Question 23

Indexing

Answer 23

A way to correct the effect of inflation on the purchasing power of a unit of currency by changing the nominal/dollar value of an item to the inflation rate.

Question 24

Interest Rate

Answer 24

A percentage that a lender charges a borrower for the use of their savings for one year.

Question 25

Nominal Interest Rate

Answer 25

The interest rate in dollar terms.

Question 26

Real Interest Rate

Answer 26

The nominal interest rate minus the inflation rate.

Question 27

Unexpected Inflation

Answer 27

The difference between the actual and expected inflation rates.

Question 28

Disinflation

Answer 28

The process of bringing down inflation that has become embedded in expectations.