Principles Of Economics

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Recession

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Roughly, a period in which real GDP declines for at least two consecutive quarters. Marked by falling output and rising unemployment

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Depression

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A prolonged and deep recession. The precise definitions of prolonged and deep are debatable

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Employed*

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Any person 16 years old or older 1) who works for pay, either for someone else or in his or her own business for 1 or more hours per week, 2) who works without pay for 15 or more hours per week in a family enterprise or 3) who has a job but has been temporarily absent, with or without pay.

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Unemployed

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a person 16 years old or older who is not working, is available for work and has made specific efforts to find work during the previous 4 weeks

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Not in the labor force

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a person who is not looking for work, either because he or she does not want a ob or has given up looking.

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labor force

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the number of people employed plus the number of people unemployed (employed + unemployed)

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unemployment rate

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the ratio of the number of people unemployed to the total number of people in the labor force. employed/(employed + unemployed)

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labor force participation rate

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the ratio of the labor force to the total population 16 years old or older. Labor Force/Population

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Discouraged worker effect

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the decline in the measured unemployment rate that results when people who want to work but cannot find jobs grow discouraged and stop looking, thus dripping out of the ranks of the unemployed and the labor force

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frictional unemployment

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the portion of unemployment that is due to the normal working of the labor market; used to denote short run job/skill matching problems

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structural unemployment

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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

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natural rate of unemployment

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the unemployment that occurs as a normal part of the functioning of the economy. Sometimes taken as the sum of frictional unemployment and structural unemployment

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cyclical unemployment

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the increase in unemployment that occurs during recessions and depressions

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Inflation

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An increase in the overall price level

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Deflation

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a decrease in the overall price level

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sustained inflation

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an increase in the overall price level that continues over a significant period

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Consumer Price Index (CPI)*

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A price index computed each month by the Bureau of Labor Statistics using a bundle that is meant to represent the "market basket" purchased monthly by the typical urban consumer

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Producer price indexes (PPIs)

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Measures of prices that producers receive for products at all stages in the production process

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Real interest rate

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the difference between the interest rate on a loan and the inflation rate

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Population

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Population = Labor force + not in the labor force