econ 2105

Shoe-leather costs

increase transaction cost from inflation
Menu cost
- real cost of changing a
- listed price.
Unit-of-account costs
- inflation makes money a less reliable unit of
- measurement
nominal interest rate

interest rate expressed in dollar terms.
real interest rate
- nominal interest rate minus the rate of
- inflation.
Disinflation

process of bringing the inflation rate down.
Real income

income divided by the price level
real wage

wage rate divided by the price level.
The natural rate of
unemployment
- normal unemployment rate around which the
- actual unemployment rate fluctuates
Cyclical unemployment
- deviation in the actual rate of unemployment
- from the natural rate
Efficiency wages

incentive for better performance.
Side effects of government
policies
- help workers who lose their jobs
Structural unemployment

more people seeking jobs in a labor market than there are jobs available
Frictional unemployment
- unemployment due to the time workers spend in
- job search

Author

sberninghaus3

20971

Card Set

econ 2105

Description

chapter 6 econ

Updated

2010-05-28T00:29:56Z

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