Chapter 5/6

Working-age population

People over the age of 16 who are not in institutions.

Full-time students and prisoners

They are not counted in the labor force.

Labor force

The number of people who are either employed or actively seeking employment.

Unemployment rate

Percentage of people in the labor force who are unemployed.

Employment-to-population ratio

The percentage of people employed aged 16 years and older divided by the working-age population.

Unemployed

Individuals who are not working but have actively sought work within the past week.

Frictionally unemployed

Individuals who are temporarily without a job while looking for a more suitable one.

Cyclically unemployed

Individuals who lose their jobs during economic downturns.

Full employment

Occurs when all unemployment is frictional or structural; cyclical unemployment is zero.

Trough

The lowest point in the business cycle, where unemployment rate generally falls.

Inflation

A general increase in prices and fall in the purchasing value of money.

Hyperinflation

Very high and typically accelerating inflation.

CPI

Consumer Price Index; measures changes in the price level of a market basket of consumer goods and services.

Real GDP

Gross Domestic Product adjusted for inflation.

Economic growth

A sustained increase in the production of goods and services in an economy over time.

Rule of 70

A formula to estimate the number of years it takes for a quantity to double, by dividing 70 by the annual growth rate.

Labor productivity

Total output per labor hour.

Aggregate production function

A relationship between the quantity of labor employed and the total output produced.

Equilibrium wage rate

The wage rate at which the quantity of labor supplied equals the quantity of labor demanded.

Potential GDP

The maximum output that an economy can produce without triggering inflation.

Human capital

The skills and knowledge possessed by an individual, which can enhance productivity.

Demand for labor

The amount of labor that employers are willing to hire at various wage rates.

Supply of labor

The total number of workers available for employment in an economy.

Shift in demand curve

A change in the quantity of labor that firms are willing to hire at any given wage.

Shift in supply curve

A change in the quantity of labor that workers are willing to offer at any given wage.

Labor market equilibrium

A situation where the quantity of labor supplied equals the quantity of labor demanded.

Discouraged workers

Individuals who are not actively looking for work because they believe no jobs are available.

Structural unemployment

Unemployment resulting from industrial reorganization, typically due to technological change.

Real wage rate

The wage rate adjusted for inflation; reflects the purchasing power of income.

Price level increases

When the overall level of prices rises across the economy.

Inflation rate calculation

A measure of the percentage change in the price level from one year to the next.

Time to double GDP

The estimated period for an economy's output to double based on growth rates.

Link between population growth and employment

The relationship in which an increasing population generally leads to increased employment.

Impact of technological change on GDP

Technological advancements can lead to increases in potential GDP by improving efficiency.

Growth rate of real GDP per person

The annual percentage increase in economic output per individual in the economy.

Economic standard of living

The quality and availability of necessities and comfort in one's everyday life.

Aggregate demand and supply

The total demand for goods and services in the economy at a given overall price level and time.

Skills and knowledge accumulation

The process by which individuals develop competencies that enable them to perform tasks effectively.