Econ woooooooooooooooooooooooooooooooooooooooooo 2

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• Unemployment The number of unemployed people, defined as all people above a particular age (i.e. not children) who are not working and who are actively looking for a job.
• Unemployment rate A measure of the amount of unemployment in an economy, expressed as a percentage, calculated by taking the total number of unemployed people in an economy and dividing by the labour force, and multiplying by 100.
• Labour force The number of people employed (those who work for gain, whether as employees, or as self-employed), plus the number of people of working age who are unemployed and who are seeking work.
• Structural unemployment A type of unemployment that occurs as a result of technological changes and changing patterns of demand (causing changes in demand for labour skills), as well as changes in the geographical location of jobs, and labour market rigidities (lack of labour market flexibility).
• Frictional unemployment A type of unemployment that occurs when workers are between jobs; workers may leave their job because they have been fired, or because their employer went out of business, or because they are in search of a better job, or they may be waiting to begin a new job, or they are moving to a new part of the country; tends to be short term. Also sometimes known as search unemployment.
• Seasonal unemployment A type of unemployment that occurs when the demand for labour in certain industries changes on a seasonal basis because of variations in needs; for example, farm workers are hired during peak harvesting seasons and let off for the rest of the year.
• Cyclical unemployment A type of unemployment that occurs during the downturns of the business cycle, when the economy is in a recessionary gap; the downturn is seen as arising from declining or low aggregate demand, and therefore is also known as ‘demand-deficient’ unemployment.
• Inflation A continuing (or sustained) increase in the average (general) price level.
• Deflation A continuing (or sustained) decrease in the average (general) price level.
• Disinflation Refers to a fall in the rate of inflation; it involves a positive rate of inflation and should be contrasted with deflation.
• Consumer Price Index (CPI) A measure of the cost of living for the typical household; it compares the value of a basket of goods and services in one year with the value of the same basket in a base year. Inflation (and deflation) are measured as a percentage change in the value of the basket from one year to another.
• Weighted Price Index A measure of average prices in one period relative to average prices in a reference period called a base period; a weighted price index is a price index that ‘weights’ the various goods and services according to their relative importance. In the consumer price index (CPI), goods and services are weighted according to their relative importance in consumer spending.
• Demand-PullInflation A type of inflation caused by an increase in aggregate demand, shown in the ADAS model as a rightward shift in the AD curve.
• Cost-Push Inflation A type of inflation caused by a fall in aggregate supply, usually resulting from increases in costs of production (for example, wages or prices of other inputs), shown in the AD-AS model as a leftward shifts of the AS curve.
• Deferred Consumption Occurs when consumers postpone spending, such as if they expect the price level to fall.
• phillips curve A curve showing the relationship between unemployment and inflation.
• Short-run Phillips Curve shows a negative relationship between the rate of inflation and the unemployment rate.
• Long-run Phillips Curve is vertical at the natural rate of unemployment, indicating that there is no negative relationship between inflation and unemployment.

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