chapter 8

Unemployment rate

The percentage of people in the labor force who are unemployed.

Employment

The total number of people currently employed, whether full-time or part-time.

Labor force participation rate

Percentage of the working-age population that is in the labor force.

Discouraged workers

Individuals not currently searching for a job because they have little hope of finding one.

Marginally attached workers

Workers not looking for a job because they are waiting for employment to begin or have not sought work in the past four weeks.

Underemployed workers

Workers who are working fewer hours than desired or in jobs that do not utilize their skills.

Structural unemployment

Unemployment resulting when there are more people seeking jobs in a particular labor market than there are jobs available at the current wage rate.

Frictional unemployment

Unemployment that occurs during the time workers spend looking for new jobs.

Natural rate of unemployment

The normal unemployment rate that includes frictional and structural unemployment.

Cyclical unemployment

Unemployment that arises from downturns in the business cycle.

Shoe-leather costs

Increased costs of transactions caused by inflation, such as the cost of frequently accessing money.

Menu costs

Real costs associated with changing prices, leading businesses to change listed prices frequently.

Interest rate

The price charged by a lender for the use of their savings for a year.

Nominal interest rate

The interest rate expressed in dollar terms.

Real interest rate

Nominal interest rate minus the rate of inflation.

Unexpected inflation

The difference between actual and expected rates of inflation, which can arbitrarily redistribute wealth.

Jobless recovery

A period during which the real GDP is growing at a below-average rate while unemployment rises.