The number of people unemployed at the end of 2009 equals the number unemployed at the end of

2008 plus the number of job losers, job leavers, entrants, and reentrants minus the number of hires and
recalls and withdrawals

The number of people employed at the end of 2009 equals the number employed at the end of 2008,
plus the number of hires and recalls minus the number of job losers and the number of job leavers

The labor force at the end of 2009 is the sum of the employed and unemployed

The unemployment rate is the percentage of the labor force that is unemployed.

Cyclical unemployment is the unemployment that fluctuates over the business cyle-increasing during a
recession and decreasing during an expansion.

A marginally attached worker is a person who does not have a job, is available and willing to work, has
not made specific efforts to find a job within the previous four weeks, but has looked for work sometime
in the recent past.

When the recovery begins, firms start hiring

Unemployed workers get jobs, but marginally attached workers start to enter the labor force and look
for jobs. These marginally attached workers are entrants and reentrants into the labor force

Because the entrants and reentrants outnumber the hires, the unemployment rate rises.

The labor market flows that create a spell of unemployment are entrants and reentrants, job leavers,
and job losers.

The labor market flows that end a spell of unemployment are hires and recalls and withdrawals.

Of the flows that create unemployment, job losers fluctuate most and entrants and reentrants second
most, and between them account for the fluctuations in the unemployment rate.

Frictional unemployment arises from normal labor turnover

Structural unemployment arises when changes in technology or international competition change the
skills needed to perform jobs.

When the output gap is positive, the umnemployment rate is less than the natural unemployment rate.

When the output gap is negative, the unemployment rate is greater than the naturl unemployment rate.

When the output gap is zero, the unemployment rate equals the natural unemployment rate.