Chapter 15: Unemployment Fluctuations and the NAIRU

These flashcards cover key terms and concepts related to unemployment fluctuations and the NAIRU as studied in Chapter 15.

Unemployment Rate

The percentage of the labor force that is unemployed and actively seeking employment.

NAIRU

Non-Accelerating Inflation Rate of Unemployment, the level of unemployment below which inflation is expected to rise.

Frictional Unemployment

Temporary unemployment that occurs when people are between jobs or entering the labor force.

Structural Unemployment

Long-term unemployment caused by shifts in the economy that create a mismatch between the skills of workers and the demands of the job market.

Cyclical Unemployment

Unemployment that results from economic recessions and fluctuations in the business cycle.

Market-Clearing Theories

Economic theories that assume all unemployment is voluntary, and wages adjust to clear the labor market.

Non-Market-Clearing Theories

Theories suggesting that unemployment can persist due to wage rigidity and that wages do not adjust quickly enough to clear the labor market.

Labour Force Participation Rate

The proportion of the working-age population that engages actively in the labor market.

Employment Insurance (EI)

A program that provides temporary financial assistance to unemployed workers while they search for jobs.

Demographic Shifts

Changes in the composition of the labor force due to factors such as age, gender, and immigration.