Economics Concepts: Unemployment, Markets, and the Circular Flow Model

Vocabulary flashcards covering the four types of unemployment, the business cycle phases, factor and product markets, household and firm roles, and the circular flow model.

Frictional Unemployment

Unemployment that occurs when individuals are temporarily between jobs or entering the workforce for the first time; typically short-term and voluntary (e.g., a recent college graduate seeking a first job).

Structural Unemployment

Unemployment that arises from a mismatch between the skills workers possess and those demanded by employers, often driven by technological changes (e.g., automation displacing factory workers).

Seasonal Unemployment

Unemployment that occurs at certain times of the year when demand for labor is lower; it is predictable and recurring (e.g., agricultural workers off-season).

Cyclical Unemployment

Unemployment that results from economic recessions or downturns when there is insufficient demand for goods and services, increasing during economic contraction and decreasing during growth (e.g., layoffs during the 2008 financial crisis).

Phases of the Business Cycle

The four recurring stages of economic activity: 1. Expansion, 2. Peak, 3. Recession, and 4. Trough.

Product Market

The marketplace where final goods and services are bought and sold, involving firms acting as sellers and households acting as buyers.

Factor Market

The marketplace where factors of production (labor, land, capital) are bought and sold, with firms demanding labor and households supplying it.

Role of Firms

Economic entities that produce goods or services for profit, create jobs, and drive innovation within the economy.

Role of Households

Economic entities that consume goods and services, supply labor, and make savings and investment decisions.

Circular Flow Model

A visual model illustrating the flow of money and resources between firms and households across both the product and factor markets.