Macreconomics Unit 3: The Labor Force/Unemployment

Labor Force

those 16 years of age or older who are either working or looking for work.

Unemployment Rate

the number unemployed as a percentage of the labor force.

Discouraged Workers

those who drop out of the labor force in frustration because they can’t find work.

Labor Force Participation Rate

the labor force as a percentage of the adult population.

Long-Term Unemployment

those looking for work for 27 weeks or longer.

Frictional Unemployment

unemployment that occurs because job seekers and employers need time to find each other.

Seasonal Unemployment

unemployment caused by seasonal changes in the demand for certain kinds of labor.

Structural Unemployment

unemployment because the skills in demand do not match those of unemployed, or the unemployed do not live where the jobs are.

Cyclical Unemployment

unemployment that fluctuates with the business cycle, increasing during contractions and decreasing during expansions.

Full Employment

Employment level when there is no cyclical unemployment.

Unemployment Benefits

cash transfers for those who lose their jobs and actively seek employment.

Underemployment

workers are overqualified for their jobs or work fewer hours than they would prefer.

Inflation

it’s measures and sources.

Hyperinflation

a very high rate of inflation.

Deflation

a sustained decrease in price level.

Disinflation

a reduction in the rate of inflation.

Demand-Pull Inflation

a sustained rise in the price level caused by a rightward shift of the aggregate demand curve.

Cost-Push Inflation

A sustained rise in the price level caused by a leftward shift of the aggregate supply curve.

Interest

the dollar amount paid by borrowers to lenders.

Interest Rate

interest per year as a percentage of the amount loaned.

Nominal Interest Rate

the interest rate expressed in current dollars as a percentage of the amount loaned; the interest rate on the loan agreement.

Real Interest Rate

the interest rate expressed in dollars of constant purchasing power as a percentage of the amount loaned; the nominal interest rate minus the inflation rate.

COLA

cost-of-living adjustments; the increase in a transfer payment or wage that reflects the increase in the price level.