Economics - Unit 4 Lesson 8

____ suggests that real GDP will drop 2% for every 1% of increase in the unemployment rate.

Okun's Law

the loss of jobs that is congruent with the business cycle and its fluctuations

cyclical unemployment

the result of the natural turnover of workers entering and leaving the work force or changing jobs for reasons other than being fired or laid off

frictional unemployment

when there is no cyclical unemployment, meaning that the economy is in full expansion mode

full employment

According to this Phillips Curve, inflation will be at ___% when unemployment is at 6%.

less than 1%

The ___ unemployment rate is the unemployment rate when the economy is at full employment.

natural

A lifeguard losing his or her job at the end of summer is an example of ____ unemployment.

seasonal

the result of losing work because the work is associated with a particular time of the year

seasonal unemployment

A man who paints automobiles on an assembly line losing his job to a robot is an example of ____ unemployment.

structural

the result of changes in technology or competition that make some jobs obsolete or changed to the degree that new skills are required

structural unemployment

A graphical illustration of the inverse relationship between the inflation rate and the unemployment rate is called ___.

the Phillips Curve

Select TWO facts about Milton Friedman.

- He argued that moving employment above the natural unemployment rate would lead to rising inflation and ultimately stagflation. - His ideas challenged the accepted beliefs of John Keynes.

Select TWO facts about Alban William Phillips.

- He was a New Zealand economist. - He created MONIAC, a computer that utilized hydraulics to demonstrate how the British economy operated.