Efficiency Wages - 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
GDP Deflator - 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.
Inflation - An increase in the overall price level.
Job Search - The active process of look
Things cost more today than they used to. In the
1920's, a loaf of bread cost about a nickel.
Today it costs more than $1.50. In general, over
the past 300 years in the United States the
overall level of prices has risen from year to
year. This phenomenon
[CPI(earlier year) - CPI(later
year)] / CPI(earlier year) or
change in the
[GDP(earlier year) - GDP(later
year)] / GDP(earlier year)
Percentage change in real
GDP = 3% - 2(change in the