natural rate of unemployment - the long term rate of unemployment

full employment - when virtually all who are able and willing to work are employed

discouraged worker - someone who is unemployed for a long period of time and stops looking for work

jobless DOES NOT EQUAL unemployed

people who are not a part of the labor force - People under the age of 16, Persons in prison or the military, Persons not looking for work but old enough to

Structural Unemployment - Someone who has certain skills and is a hard worker but the jobs available require other skills

Frictional Unemployment - The time someone is unemployed while they transition to a new position at a different company or when their new job hasn't started yet

Structural Unemployment - Someone who wants to work but doesn't live where jobs are located and is unable to move there.

money illusion - When someone uses nominal dollars rather than real dollars to estimate their current wealth

Price Stability - when the average price level doesn't go up or down too quickly in an economy

Average prices increase AND decrease in an economy.

Increased spending directly causes an increase in amount of inflation within an economy

the core inflation excludes price of energy and food in its calculation

People with debt benefit from unpredicted inflation, ceteris paribus

People or businesses earning commission or with other variable incomes are most likely to be harmed by deflation, ceteris paribus

components of a country's Aggregate Demand - Investment Spending, Government Spending, Consumption Spending, Net Exports

Full-employment GDP - the value of total market output (stuff being made in the economy) that corresponds with price stability in the economy

If an economy isn't producing enough to be at the full-employment rate of output (x-axis), we have higher unemployment because we don't need as much labor when we produce less stuff

The business cycle - alternating periods of economic growth and contraction

The level of long-run aggregate supply is equal to the full-employment rate of output in an economy.

The aggregate supply and demand model can help us model inflation in an economy