Chapter 6: Macroeconomic Measurements Part 1: Prices and unemployment

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Price Level Price Index Consumer Price Index (CPI) Base Year Inflation Real Income Nominal Income Unemployment Rate Employment Rate Labor Force Participation Rate Frictional Unemployment Structural Unemployment Natural Unemployment Full Employment Cyclical Unemployment Rate

A weighted average of the price of all goods and services. A measure of the price level. The weighted average of prices of a specific set of goods and services purchased by a typical household; a widely cited index number for the price level. The year chosen as a point of reference or basis of comparison for prices in other years; a benchmark year. An increase in the price level. Nominal income adjusted for price changes. The current dollar amount of a person's income. The percentage of the civilian force that is unemployed: Unemployment rate = Number of unemployed persons / Civilian labor force. The percentage of the civilian noninstitutional population that is employed: Employment rate = Number of employed persons / Civilian noninstitutional population. The percentage of the civilian noninstitutional population that is in the civilian labor force: Labor force participation rate = Civilian labor force / Civilian noninstitutional population. Unemployment that is due to the natural so-called frictions in the economy and that is caused by changing market conditions and represented by qualified individuals with transferable skills who change jobs. Unemployment due to structural changes in the economy that eliminate some jobs and create others for which the unemployed are unqualified. Unemployment caused by frictional and structural factors in the economy: Natural unemployment rate = Frictional unemployment rate + Structural unemployment rate. The condition that exists when the unemployment rate is equal to the natural unemployment rate. The difference between the unemployment rate and the natural unemployment rate.

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