Vocab Page 2

Question 0

Cyclical Unemployment

Answer 0

This refers to unemployment that rises during economic downturns and falls when the economy improves. It gets it’s name because it varies with the business cycle though it can also be persistent

Question 1

Structural Unemployment

Answer 1

Unemployment involving a mismatch between the demand for labor and the supply of labor; that is, when there is a mismatch between sufficiently skilled workers looking for jobs and the vacancies available

Question 2

Classical Unemployment

Answer 2

It occurs when real wages are higher than the market-equilibrium wage. In simple terms, institutions such as “the minimum wage” deter employers from hiring all of the available workers, because the cost would exceed the marginal benefit of hiring them

Question 3

Hardcore Unemployment

Answer 3

Unemployment that accounts for those unable to work due to mental or physical characteristics

Question 4

National Output/Product/Gross National Product

Answer 4

Refers to the value of all commodities produced in an economy within a calendar year

Question 5

Gross Domestic Product

Answer 5

Refers to the value of all commodities produced in an economy within a calendar year + the incomes of our nationals earned abroad - the income of foreigners earned inside the country

Question 6

Inflationary Gap

Answer 6

This is when Actual National Income is greater than the Potential National Income. It requires a CONTRACTIONARY POLICY to reduce or eliminate it

Question 7

Expansionary AD Shock

Answer 7

A sudden temporary increase in aggregate demand that causes an increase in national income