Unit 3.5 Definitions

Unemployment - the failure of an economy to fully employ its labour force.
Umeployment rate - The percentage of the labour force unemployed at any time.
Costs of Unemployment - Loss of potiential goods and services, unequal burdens, emotional distress
Types of Unemployment - Frictional: workers who are either waiting for jobs in the future or currently searching for them. Structural: Workers who have been laid off because their skills are now obsolete and have been replaced by machines. Seasonal: Workers who have jobs in the winter and summer but do not in the months between. Cyclical: Unemployment caused by insufficent total spending or by insufficient aggregate demand.
Inflation - A rise in the general level of prices in an economy.
Types of inflation - Cost push: Increases in the price level caused by increases in resource costs. Demand pull: Increases in the price level resulting from an excess of demand over output at the existing price level. Excess monetary growth: An increase in the price level caused by an increase in the supply of money causing it to be worth less.
Costs of Inflation - Decrease in real income, Increased costs of production