Working age population is the total number of people aged 16 years and over who are not in jail hospitals or some other form of institutional care labor force is the sums of the employed and the unemployed unemployment rate is the percentage of the people in the labor force who are unemployed That is Unemployment rate Number of people Unemployed labor force x 100 Labor force number of people employed number of people unemployed Employment to population ratio is the percentage of people of working age who have jobs Employment to population ratio Number of people employed working age population x 100 the labor force participation rate is the percentage of the working age population who are members of the labor force that is Labor force participation rate labor force working age population x 100 marginally attached worker is a person who currently is either working nor looking for work but has indicated that he or she wants and is available for a job and has looked for work sometime in the recent past A marginally attached worker who has stopped looking for a job because of repeated failure to find one is called a discouraged worker Official unemployment measure excludes marginally attached workers because they haven t made specific efforts to find a job within the past 4 weeks find a job unemployment frictional unemployment the unemployment that arises from the normal labor turnover people entering and leaving the labor force and from the ongoing creation and destruction of jobs Frictional Unemployment is a permanent and healthy phenomenon in our economy structural unemployment the unemployment that arises when changes in technology or international competition change the skills needed to perform jobs or change the locations of jobs Structural unemployment usually lasts longer than frictional unemployment because workers must retrain and possibly relocate to Cyclical Unemployment the higher than normal unemployment at a business cycle trough and the lower than normal unemployment at a business cycle peak A worker who is laid off because the economy is in a recession and who gets rehired some months later when the expansion begins has experienced cyclical natural unemployment natural unemployment is the unemployment that arises from frictions and structural change when there is no cyclical unemployment when all the unemployment is is frictional and structural Natural unemployment as a percentage of the labor force is called the natural unemployment rate full unemployment is defined as a situation in which the unemployment rate equals the natural unemployment rate The quantity of real GDP at full employment is potential GDP Over the business cycle real GDP fluctuates around potential GDP The gap between real GDP and potential GDP is called the output gap As the output gap fluctuates over the business cycle the unemployment rate fluctuates around the natural unemployment rate Natural Unemployment is influenced by 4 key factors The age distribution of the population the scale of structural change the real wage rate unemployment benefits A persistently rising price level is called inflation A persistently falling price level is called deflation An unexpected inflation or deflation redistributes income cid 127 cid 127 cid 127 cid 127 cid 127 redistributes wealth lowers real GDP and employment Diverts resources from production collapse At it s worst inflation becomes hyperinflation an inflation rate of 50 percent a month or higher that grinds the economy to a halt and causes a society to Every month the Bureau of Labor Statistics measures the price level by calculating the con cid 127 cid 127 cid 127
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