Unemployment Rate

The unemployment rate measures the percentage of the total

civilian labor force that are currently unemployed. The formula for
the unemployment rate is given by

The civilian labor force consists of all civilians (non‐military

personnel), 16 years of age or older, who are willing to work and are
not incarcerated. The number of people unemployed is determined
according to certain criteria. In the U.S., an unemployed person is a
member of the civilian labor force who is currently available for
work and who has worked less than one hour per week for pay or
profit. Furthermore, an unemployed worker must have been actively
searching for work during the past month. Workers who are not
actively searching for work, referred to as discouraged workers,
are not considered a part of the civilian labor force and therefore
are not counted among the unemployed.

Frictional unemployment. Frictional unemployment is the term used

to describe unemployment that results from difficulties in
matching qualified workers with new jobs. Many qualified workers
seeking work are not able to find new jobs right away, usually
because of a lack of complete information about new job openings.
While it is likely that qualified workers will soon be matched with
new jobs, these workers are considered frictionally unemployed
during the time that they spend searching for their new jobs.

Structural unemployment. Structural unemployment results from

structural changes in the economy that cause workers to lose jobs.
The same structural changes also prevent these workers from
obtaining new jobs. Structurally unemployed workers are not
qualified for the new job openings that are available, mainly
because they lack the education or training needed for the new
jobs. Consequently, the structurally unemployed tend to be out of
work for long periods of time, usually until they learn the skills
needed for the new jobs or until they decide to relocate.
PREVIOUSNominal GDP, Real GDP, and Price Level

NEXTAggregate Demand (AD) Curve

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