Chapter 8 Summary

Chapter 8 Summary - Chapter 8 Summary - Inflation and...

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Unformatted text preview: Chapter 8 Summary - Inflation and unemployment are the twin evils of macroeconomics and the main concerns of macroeconomic policy.- Employment is the number of people employed; unemployment is the number of people unemployed and actively looking for work. Their sum is equal to the labor force, and the labor force participation rate is the percentage of the population age 16 or older that is in the labor force.- The unemployment rate, the percentage of the labor force that is unemployed and actively looking for work, can both overstate and understate the true level of unemployment. It can overstate because it counts as unemployed those who are continuing to search for a job despite have been offered one (that is, workers who are frictionally unemployed). It can understate because it ignores frustrated workers, such as discouraged workers, marginally attached workers, and the underemployed. In addition, the unemployment rate varies greatly among different groups in the population; it is typically higher for...
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