FE T8 - Unemployment and Inflation

A set of vocabulary flashcards covering the key concepts and types of unemployment and inflation in macroeconomics.

Unemployment

The situation whereby labor force is without a job but actively seeking for job.

Labor Force

Includes persons of working age which is from 15 to 64 years old who are either working or unemployed and seeking jobs.

Discouraged Workers

Persons who initially put effort in searching for jobs but gradually give up looking due to continual failure.

Underemployment

Labor resources that are not fully utilized, including people working jobs below their capability or being paid below what they deserve.

Frictional Unemployment

The portion of unemployment due to short-run job or skill-matching problems.

Structural Unemployment

The portion of unemployment that is due to changes in the structure of the economy that result in a significant loss of jobs in certain industries.

Natural Rate of Unemployment

The normal rate of unemployment around which the unemployment rate fluctuates, calculated as the sum of frictional, structural, and seasonal unemployment.

Stagflation

Occurs when the overall price level rises rapidly (inflation) during periods of recession or high and persistent unemployment (stagnation).

Demand Pull Inflation

Inflation caused by continuing rises in aggregate demand ($AD$) normally associated with an increase in money supply, government purchases, or exports.

Phillips Curve

A curve that illustrates a negative association and short-run trade-off between the inflation rate and the unemployment rate.