Unemployment that results when workers lack the skills required for the available jobs, or there are more people seeking jobs in a labor market than there are jobs available at the current wage rate.

Wages that exceed the market equilibrium wage rate; employers use efficiency wages to motivate hard work and reduce worker turnover.

The unemployment rate that arises from the effects of frictional plus structural unemployment.

The deviation of the actual rate of unemployment from the natural rate.

The wage rate divided by the price level to adjust for the effects of inflation or deflation.

Income divided by the price level to adjust for the effects of inflation or deflation.

The percentage increase in the overall level of prices per year.

The increased costs of transactions caused by inflation.

The real costs of changing listed prices.

Arise from the way inflation makes money a less reliable unit of measurement.

The interest rate actually paid for a loan.

The nominal interest rate minus the rate of inflation.

The process of bringing the inflation rate down.

A measure of the overall level of prices in the economy.

A hypothetical set of consumer purchases of goods and services.

Measures the cost of purchasing a given market basket in a given year; the index value is normalized so that it is equal to 100 in the selected base year.

Year arbitrarily chosen for comparison when calculating a price index; the price level compares the price of the market basket of goods in a given year to its price in the base year.

Measures the cost of the market basket of a typical urban American family.

Occurs in the consumer price index because, over time, items with prices that have risen more receive too much weight (because households substitute away from them), while items with prices that have risen least are given too little weight (because households shift their spending toward them).

Measures the prices of goods and services purchased by producers.