The year from which the original quantities and/or prices are taken in the calculation of an index.
Non-cash payments made to employees. For instance, health care plans or pensions.
The government organization responsible for regularly gathering data about the economic status of the population.
The year for which the quantities and/or prices of goods or services are replaced by those of the base year in the calculation of an index.
An index based on the amount of money necessary to purchase the market basket of goods and services purchased by the average consumer, relative to the same basket in an earlier year.
The consumer price index is a cost of living index that is based on a fixed market basket of goods and services purchased by the average consumer.
Deviations from the natural rate of unemployment based on normal fluctuations in the business cycle.
Wages paid by a firm to an employee that are above the market-clearing wage with the intention of keeping the employees healthier, happier, and of high productivity. Efficiency wages increase unemployment by creating a surplus of labor at the given wage.
A market where the quantity supplied is equal to the quantity demanded and the price of goods is set at the equilibrium price.
An individual who is currently working at a job.
Describes the movement of the factors of a market so that the quantity supplied is equal to the quantity demanded and the price of goods is set at the equilibrium price.
The wage in the labor market where labor supply is equal to labor demand and the market clears.
When economists and consumers plan upon the presence of inflation, and this expectation is reflected in the economic decisions made by these groups.
A set group of goods and services whose quantities do not change over time. A fixed basket is used in the calculation of the CPI.
A group of goods and services that changes both in composition and quantity as consumers' preferences change. A flexible basket is used in the calculation of the GDP deflator, for instance.
A type of unemployment in which an individual is between jobs.
When the economy is producing at an output level that corresponds to the natural rate of unemployment, or about 6%.
When the unemployment level is at, or very close to, 6% (the natural rate of unemployment).
The level of output that occurs when the labor force is at full employment.
The gross domestic product is the total value of all goods and services produced in an economy.
The ratio of the nominal GDP to the real GDP. It shows the overall price level by comparing the cost of a basket of goods from one year to the next.
An increase in the overall price level.
The active process of looking for a job.
The market where firms supply jobs and individuals supply labor and in which wage is the equilibrating factor.
Groups of workers who rally together to improve the pay and conditions on the job.
An index where the basket of goods is fixed.
This refers to the economy as a whole, as opposed to a view of the economy as based on the actions of individual actors.
The level, price, or quantity where supply and demand are equal.
Costs associated with inflation that arise when firms have to change printed price schedules.
Government imposed minimum hourly wages that must be observed. The minimum wage is aimed at providing a minimum standard of living, but also have the ancillary effect of increasing unemployment.
The total value of goods and services produced by an economy in a specified time period. Also known as GDP.
The rate of unemployment that the economy tends to hover around. Most economists believe that this value is around 6%.
The total value of all goods and services produced in an economy, valued at current dollar, and not adjusted for inflation.
Prices of goods and services valued at dollars current when the goods and services were provided. Nominal prices are not adjusted for inflation.
This details the inverse relationship between unemployment and real GDP. Click here to see the Okun's Law Formula.
Describes people who are not employed and are not currently looking for employment. This includes children and retirees.
An index based upon a flexible basket of goods and services.
Describes the general inverse relationship between unemployment and inflation. Click here to see the Phillips Curve Formula.
The output of an economy when all of the productive factors, including labor, are used at their normal rate. In terms of unemployment, this corresponds to a 6% unemployment rate.
The general cost of items within an economy relative to one another.
The wage paid to workers.
The production level of an economy when all of the productive factors, including labor, are used at their normal rate. In terms of unemployment, this corresponds to a 6% unemployment rate.
The amount of goods and services that a unit of currency can buy.
The total value of all goods and services produced in an economy valued at constant dollars, or adjusted for inflation.
The value of something at constant dollars, or adjusted for inflation.
Costs of expected inflation caused by people having to make more trips to the bank to make withdrawals because they do not want to keep cash on hand.
When inflation and unemployment both increase. This phenomenon seems to negate the general applicability of the Phillips Curve.
The level of economic well-being that an individual enjoys.
Unemployment due to a mismatch between workers' skills and firms' needs.
An item that is purchased in lieu of a more expensive or less desirable item.
The sum of employed workers and unemployed job searchers.
Describes individuals who are not currently working but are currently searching for a job.
Inflation that economists and consumers do not expect.
The purchasing power of a dollar.
The amount of money paid to a worker.
|Percentage change in the price level||[CPI(earlier year) - CPI(later year)] / CPI(earlier year) or [GDP(earlier year) - GDP(later year)] / GDP(earlier year)|
|Okun's Law||Percentage change in real GDP = 3% - 2(change in the unemployment rate)|
|Unemployment Rate||Unemployment rate = (unemployed)/(employed + unemployed)|
Inflation = ((expected inflation) - B) ((cyclical unemployment rate) + (error))
where B equals a number greater than zero that represents the sensitivity of inflation to unemployment.