Unemployment Measures and Economic Concepts

A set of flashcards covering key terms and concepts related to unemployment measures and economic principles discussed in the lecture.

Labor Force

All employed and unemployed individuals combined.

U3 Measure

The official unemployment rate, including persons actively seeking work.

U4 Measure

Includes U3 plus discouraged workers who have looked for a job in the last year but not in the last month.

Discouraged Workers

Individuals who have given up looking for a job because they feel no jobs are available for them.

Hidden Unemployment

Refers to discouraged workers who are not counted in the standard unemployment statistics.

U5 Measure

Includes U4 plus all marginally attached workers.

Marginally Attached Workers

Individuals who have looked for work in the past year but are not currently looking for a job.

U6 Measure

Includes U5 plus involuntary part-time workers who want full-time work but can only find part-time jobs.

Involuntary Part-Time Workers

Individuals who are employed part-time but desire full-time work.

Aggregate Demand

The total demand for goods and services within an economy at a given overall price level.

Core Inflation

Measures inflation excluding food and energy prices because they are very volatile.

Disinflation

A decrease in the rate of inflation; prices are still rising but at a slower rate.

Aggregate Expenditure Method

A theory proposing that increased spending can lead to increased output in the economy.

Short Run Aggregate Supply (SRAS)

Concerned with the period where resource costs are fixed, leading to higher profit margins when prices rise.

Long Run Aggregate Supply (LRAS)

Assumes all resource costs are variable, representing the economy's full employment output level.

CPI (Consumer Price Index)

Measures the average change over time in the prices paid by consumers for goods and services.

PCE (Personal Consumption Expenditures)

Tracks changes in the price of consumer goods, similar to CPI but weighted differently.

Natural Rate of Unemployment

The level of unemployment expected in a healthy economy, typically around 4%.

Target Rate of Inflation

The ideal rate of inflation that policymakers aim to achieve, generally around 2%.

Cost-Push Inflation

Caused by an increase in the cost of production, shifting the supply curve left, leading to higher prices.

Demand-Pull Inflation

Results from an increase in aggregate demand, shifting the demand curve right, leading to higher prices.

Frictional Unemployment

Temporary unemployment occurring when individuals are between jobs.

Structural Unemployment

Long-term unemployment arising from fundamental changes in the economy that make certain skills obsolete.