ECON 100: Unemployment and Inflation

Flashcards covering key concepts from the lecture on unemployment and inflation.

Frictional Unemployment

Unemployment due to the time workers spend in job search; short-term unemployment occurring when people are between jobs.

Structural Unemployment

Unemployment caused by a mismatch between workers' skills and job requirements, often due to technological change or industry shifts.

Cyclical Unemployment

Unemployment that rises during economic downturns and falls when the economy improves.

Natural Rate of Unemployment

The normal unemployment rate around which the actual unemployment rate fluctuates, consisting of frictional and structural unemployment.

Minimum Wage

A government-mandated floor on the wage rate that can lead to a surplus in the labor market if set too high.

Inflation

An increase in the price level, often measured by the Consumer Price Index (CPI); can lead to a perception of reduced purchasing power.

Deflation

A phenomenon where the inflation rate turns negative, indicating a decrease in the general price level of goods and services.

Real Wage

The wage rate adjusted for inflation, indicating the actual purchasing power of income.

Nominal Interest Rate

The stated interest rate on a loan or investment not adjusted for inflation.

Real Interest Rate

The nominal interest rate minus the rate of inflation, reflecting the true cost of borrowing.