Chapter 20

What is it called when real and potential GDP are =?

Natural enmployment

frictional unemployment

when workers move from one job to another

structural unemployment

occurs as a result in technology or in the way the economy is structured

seasonal unemployment

fluctuations in unemployment due to regular occurances such as holidays or certain schedules

cyclical unemployment

results from recessions and economic downfalls

discouraged worker

person who wants a job, but has stopped looking for work for job-related reasons

Part-time worker

works 1-39 hours a week

Aggregate Hours

total number of hours worked by all workers in an economy over a period of time.

Creative destruction

refers to the loss of whole business firms as well as jobs when new ideas and techniques replace the old

Real Wage

wage/price of labor adjusted for inflation

Insider

has some control or infulence over wage and hiring policy

Outsider

someone not working for a particular firm, making it difficult for them to get a job even though they are willing to work for lower wage

What two types of unemployment cause the nat. unemployment rate?

frictional and structural

What % of the labor force works part-time?

11%

What are the 4 ways people are counted as unemployed?

Job leavers, job losers, new entrants, re-entrants

Creative destruction accounts for what percent of lost jobs?

5%

What percent of jobs lost comes from job leavers?

less than 25%

What group is most likely to experience the highest rate of unemployment?

young minority males

Besides wanting to increase efficiency, why else would a firm pay the efficiency wage?

Turnover is lower and so are training costs

The best example of the insider vs. outsider explanation is what group?

labor unions

Which explanation argues that laws requiring wages be kept at a minimum amount?

minimum wage explanation

What two policies could cause the natural unemployment rate to decline?

lower minimum wage and lower unemployment compensation

What might help unemployment from job search to decline?

improving communications about labor market

Stochastic Equilibrium is the result of what?

labor markets in perpetual motion

What is the current unemployment rate?

5%

What happens to the unemployment rate when people drop out of the labor force b/c of a recession?

it decreases