Labor Force

our phases of the business cycle consist of:

• A depression phase
• A recessionary phase
• Recovery phase
• An expansionary phase

During a recessionary phase of the business cycle would be the most desirable time to purchase large ticket items due to lower levels of inflation and interest rates.

During an expansionary phase of the business cycle would be the least desirable time to purchase large ticket items due to higher levels of inflation and interest rates.

Our labor force is consisted of both employed and unemployed workers.

Labor Force Participation Rate (LFPR) =

The term “full employment” implies that all willing and able people who can work are actively engaged in the labor force. “Full employment” suggests that our country’s unemployment rate is between 3-6%. Our country will never achieve zero-percent unemployment since our economy will always experience a natural rate of unemployment.

Natural Rate of Unemployment = Frictional unemployment + Structural unemployment

Frictional unemployment are workers who are unemployed, but they have transferable job skills and they are in-between jobs.

Structural unemployment are workers who have mismatched job skills.

Discouraged workers are workers who have been out of work for four or more weeks. These individuals are not applying for open positions, are not registered at their local job service, and are not going on any interviews. They have become very discouraged and have left the labor force.

Unemployed workers are applying for open positions, are going on interviews, and are registered at their local job service. They are actively seeking employment.

Employed workers can range from workers who work from 1-hour to 40-hours plus per week.

Four causes of unemployment include:

• Job losers
• Job leavers
• Re-entrants
• New entrants

Four types of unemployment:

• Seasonal unemployment
• Frictional unemployment
• Structural unemployment
• Cyclical unemployment

Inflation is defined as an increase in overall prices across the board.