Summary Microeconomics and Macroeconomics

Frictional unemployment - Temporary unemployment while transitioning between jobs or just entering the labor market; typically short in duration but always present in a market economy. Structural unemployment - Unemployment due to skills no longer being in demand where workers live; typically leads to longer duration and need to acquire training or relocation. Cyclical unemployment - Unemployment due to a recession. Classical unemployment - Unemployment due to real wages being too high (e.g., through minimum wage laws). Unemployment rate - Total of unemployed workers divided by the total labor force. Natural rate of unemployment - Sum of the rates of frictional, structural, and classical unemployment (i.e., excludes cyclical unemployment) Voluntary unemployment - Another term for natural rate of unemployment; assumed to be more stable than the total unemployment rate. Full employment - When the unemployment rate equals the natural rate of unemployment and cyclical unemployment is zero. Nominal wage - Wage per unit of time in the currency used by a country; i.e., wage. Income - Total revenue from all sources over a period of time Wage level - Average wage for all employed individuals. Real wage - Nominal wage divided by a price index Firm - A unit which adds value to products. Value-added - Difference between the revenue and the cost of goods sold. National income - Private sector total income Disposable income - National income minus net tax. Government expenditure - Total expenditure by government on goods and services. Balanced budget - When government spending equals net taxes. Net exports - Amount of money the rest of the world borrows from a country; exports minus imports Capital - Manufactured goods used to produce other goods and services and are not used up in the production process. Fixed capital - Sometimes divided into physical capital and immaterial capital such as individual capital and social capital. Financial capital - Bank deposits, stocks, bonds, and other assets. Individual capital - Talent, skills, and knowledge. Gross investment - All finished goods produced but not consumed. Gross fixed investment - Total amount of investment in fixed capital