Macroeconomics: Employment and Unemployment & Price Levels

A set of flashcards covering key concepts related to unemployment, business cycles, GDP, and inflation as discussed in the lecture notes.

Real GDP

The measure of a nation's economic output that accounts for the effects of inflation or deflation.

Potential GDP

The maximum value of real GDP that can be produced without causing inflation, considering resources like labor and capital.

Business Cycle

The periodic but irregular up-and-down movement of total production and other measures of economic activity.

Recession

A period during which real GDP decreases, indicated by negative growth for at least two successive quarters.

Expansion

A period during which real GDP increases from a trough to a peak.

Unemployment Rate

The percentage of the labor force that is unemployed.

Labor Force

The sum of employed and unemployed workers; the total number of people available to work.

Marginally Attached Workers

Individuals who are neither working nor currently looking for work but have indicated they want a job.

Frictional Unemployment

Unemployment that arises from normal labor market turnover; it reflects the time it takes for people to find a new job.

Structural Unemployment

Unemployment resulting from technological changes or foreign competition, which alters the skills required or job locations.

Cyclical Unemployment

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

Natural Unemployment

The combination of frictional and structural unemployment when there is no cyclical unemployment.

Output Gap

The difference between real GDP and potential GDP, indicating whether the economy is operating above or below its sustainable capacity.

Inflation

A persistently rising price level that erodes purchasing power.

Deflation

A persistently falling price level that increases money's value.

Hyperinflation

An extremely high and typically accelerating inflation rate that can lead to a collapse of the economy.

U-1 Measure of Unemployment

Unemployed for 15 weeks or longer, as a percentage of the civilian labor force.

U-2 Measure of Unemployment

Job losers and persons who completed temporary jobs, as a percentage of the civilian labor force.

U-3 Measure of Unemployment

Total unemployed, as a percentage of the civilian labor force (this is the official unemployment rate often reported).

U-4 Measure of Unemployment

The total unemployed (U-3) plus discouraged workers, as a percentage of the civilian labor force plus discouraged workers.

U-5 Measure of Unemployment

The U-4 measure plus all other marginally attached workers, as a percentage of the civilian labor force plus all marginally attached workers.

U-6 Measure of Unemployment

The broadest measure of labor underutilization, including the officially unemployed (U-3), all marginally attached workers, and those employed part-time for economic reasons. It represents total unemployed plus all marginally attached workers plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers.