Labor Market & Matching
What term describes the economic system in which wage levels and employment are determined through interaction of workers and firms?
Labor market
What concept describes short-term unemployment that occurs while workers are actively searching for jobs that match their skills?
Frictional unemployment
Which phase of the business cycle involves rising employment, increasing output, and recovery in economic activity?
Economic expansion
Which group is counted in unemployment statistics when calculating the active labor force of an economy?
Labor force
What is the primary macroeconomic consequence of underutilized labor resources in terms of production?
Lost output
In a competitive labor market, what specific condition must hold at the equilibrium wage level regarding labor supply and demand?
Supply equals demand
What economic problem arises when workers’ qualifications do not match the requirements of available jobs due to technological or structural changes?
Structural unemployment
During which phase does the economy begin declining after reaching maximum capacity utilization and peak output?
Economic recession
What ratio expresses the proportion of unemployed individuals relative to all economically active individuals?
Unemployment rate
What measure represents the shortfall between actual economic production and its maximum sustainable level?
GDP gap
What concept formally represents the process of converting unemployment and vacancies into successful job matches?
Matching function
What condition in the economy leads firms to reduce hiring because of insufficient overall demand for goods and services?
Cyclical unemployment
What phase represents the turning point where economic decline stops and recovery begins from minimum output levels?
Economic trough
What concept defines the level of unemployment consistent with full employment, excluding cyclical factors?
Natural unemployment rate
What empirical relationship links deviations in unemployment from its natural rate to changes in output levels?
Okun’s Law
If the vacancy-to-unemployment ratio (v/u) rises significantly, what structural condition does this imply about job availability relative to workers?
Tight labor market
What concept explains the coexistence of job vacancies and unemployment due to inefficiencies in matching workers with jobs?
Matching inefficiency
When aggregate supply shifts left from AS₀ to AS₂ due to structural factors, what combined macroeconomic outcome occurs?
Higher prices, lower output
What macroeconomic pressure emerges when unemployment persistently falls below its natural level in the short run?
Rising inflation pressure
When actual unemployment exceeds the natural rate, what relative position does actual GDP take compared to potential GDP?
Below potential output
What macroeconomic curve illustrates a stable inverse relationship between vacancies and unemployment, reflecting matching efficiency over time?
Beveridge Curve
What term describes the unemployment level consisting only of frictional and structural components in long-run equilibrium?
Natural unemployment rate
How are causes of economic fluctuations classified when distinguishing between investment-driven changes and shocks like wars or climate events?
Endogenous and exogenous
What long-term mechanism explains why past high unemployment can permanently increase the natural rate over time?
Hysteresis effect
In Okun’s Law, what does the coefficient (β) quantify regarding the responsiveness of output to unemployment changes?
Output sensitivity coefficient