Understanding Unemployment and the Business Cycle

These flashcards cover key concepts related to unemployment and the business cycle as discussed in the lecture notes.

Unemployment

Workers that are actively looking for a job but aren’t working.

Unemployment Rate

The percent of people in the labor force who want a job but are not working.

Labor Force

Individuals above 16 years old who are able and willing to work, excluding those institutionalized, in military service, in school full-time, or retired.

Frictional Unemployment

Temporary unemployment occurring when individuals are between jobs and are qualified workers with transferable skills.

Structural Unemployment

Unemployment resulting from changes in the labor force that render some skills obsolete; requires workers to learn new skills.

Cyclical Unemployment

Unemployment caused by a recession when demand for goods and services decreases, leading to layoffs.

Natural Rate of Unemployment (NRU)

The level of unemployment that exists when the economy is healthy and growing, consisting of frictional and structural unemployment.

Full Employment Output (Y)

The Real GDP created when there is no cyclical unemployment.

Discouraged Workers

Individuals who are no longer looking for a job because they have given up.

Labor Force Participation Rate

Percentage of the population that is part of the labor force.

Underemployed Workers

Individuals who want more hours of work but cannot get them, still counted as employed.

Creative Destruction

The permanent loss of jobs due to structural unemployment where new technologies replace old jobs.