×

### Let's log you in.

or

Don't have a StudySoup account? Create one here!

×

or

## Econ 2030 Lecture 3&4

by: Melissa Cooey

37

0

5

# Econ 2030 Lecture 3&4 Econ 2030

Marketplace > Auburn University > Economcs > Econ 2030 > Econ 2030 Lecture 3 4
Melissa Cooey
AU

Get a free preview of these Notes, just enter your email below.

×
Unlock Preview

Notes from Feb. 2 & 4 These notes cover GDP deflator, unemployment, and other market statistics.
COURSE
Macroeconomics
PROF.
Dr. Stern
TYPE
Class Notes
PAGES
5
WORDS
KARMA
25 ?

## Popular in Economcs

This 5 page Class Notes was uploaded by Melissa Cooey on Friday February 5, 2016. The Class Notes belongs to Econ 2030 at Auburn University taught by Dr. Stern in Spring 2016. Since its upload, it has received 37 views. For similar materials see Macroeconomics in Economcs at Auburn University.

×

## Reviews for Econ 2030 Lecture 3&4

×

×

### What is Karma?

#### You can buy or earn more Karma at anytime and redeem it for class notes, study guides, flashcards, and more!

Date Created: 02/05/16
Friday, February 5, y Lecture 3 continued … The GDP Deflator ­ Price level ­ a measure of the average prices of goods and services in the economy. ­ GDP Deflator ­ a measure of the price level, calculated by dividing nominal GDP by  real GDP and multiplying by 100. ­ Inflation ­ percentage change in the price level. ­ GDP deflator = (Nominal GDP/Real GDP) x100% ­ Inflation = (GDP deflator year 2 ­ GDP deflator year 1/GDP deflator year 1) x100% 1 Friday, February 5, y Lecture 4 ­ Unemployment Measuring Unemployment ­ There are more than 300 million people living in the United States, and monitoring  and and reporting their activities regularly would be very difficult and and costly. ­ Instead, the U.S. Department of Labor reports estimates of employment,  unemployment, and other statistics related to the labor force each month. ­ Of these statistics, the most watched is known as the unemployment rate: the  percentage of the labor force that is unemployed. Classifications ­ Working Age Population (WAP) ­ Non­institutionalized individuals 16 years or older. ­ Employed (E) ­ Anyone in the WAP who: ­ did any work at all as a paid employee ­ worked in their own business, profession, or on their own farm. ­ worked 15 hours or more as unpaid workers in a family­operated enterprise. ­ did not work but had jobs or businesses from which they were temporarily absent because of illness, vacation, labor dispute, etc. ­ part­time, “unemployed”, and self­employed (home businesses) persons are  counted as employed. ­ Unemployed (U) 2 Friday, February 5, y ­ Anyone in WAP who is not employed and: ­ has actively looked for a job during the survey period (last 4 weeks). ­ is waiting to be recalled for a job from which they were laid off.  ­ Labor Force (LF) ­ Anyone who is employed (E) or unemployed (U) is measured as: ­ LF = E+U ­ Discouraged Workers ­ people who are available for worked but have not looked for a job during the  previous 4 weeks because they believe no jobs are available for them. ­ NOT included in the labor force. Important Labor Market Statistics ­ The Unemployment Rate (UR) measures the percentage of the labor force that is  unemployed:  ­ UR = (U/LF) x100% ­ The Employment Rate (ER) measures the percentage of the labor force that is  employed: ­ ER = (E/LF) x100% ­ The Labor Force Participation Rate (LFPR) measures the percentage of the  working­age population in the work force: ­ LFPR = (LF/WAP) x100% ­ The Employee­to ­Population Ratio (EPR) measures the percentage of employed  in the working­age population: ­ EPR = (E/WAP) x100% 3 Friday, February 5, y Three Types of Unemployment ­ Frictional Unemployment ­ short­term unemployment that arises from the normal  turnover in labor markets.  ­ Structural Unemployment ­ unemployment arising from lack of skills; often results  from technological progress. Usually lasts longer than frictional unemployment (takes  time to acquire a new skill). ­ Cyclical Unemployment ­ unemployment caused by a business cycle (recession). ­ It is impossible to have zero unemployment because of frictional and structural  unemployment. ­ Natural (“normal”) rate of unemployment = frictional u + structural u = 5­6% Explaining Unemployment ­ Unemployment insurance and other payments to the unemployed: ­ In the United States and most other industrial countries, the unemployed are  eligible for unemployment insurance payments from the government. ­ In the U.S., these payments are equal to about half the average wage, and are  paid for 6 months. ­ In many Western European countries, unemployment insurance is bigger and is  paid for a longer time (70­80% of the previous wage for over a year). ­ Minimum Wages: ­ In 2009, minimum wage was raised to \$7.25/h. ­ If the minimum wage is set above the equilibrium market wage, the quantity of  labor supplied will be greater than the quantity of labor demanded, causing  unemployment. ­ Economists believe that the current minimum wages is above the market wage for  some workers, but they disagree on the amount of unemployment that has  resulted. 4 Friday, February 5, y ­ Ironically, minimum wage laws hurt, primarily unskilled (blue­collar) and  inexperienced (teenage) workers who they intend to protect. ­ Labor Unions: ­ Bargain with employers for higher wages and better working conditions for their  workers. ­ Protect insiders (members of the union) but hurt outsiders, causing unemployment. ­ Efficiency Wages: ­ Some firms choose to pay their employees higher­than­market wages to increase  their productivity and minimize job turnover. ­ Cause unemployment because there may be workers willing to work for less. 5

×

×

### BOOM! Enjoy Your Free Notes!

×

Looks like you've already subscribed to StudySoup, you won't need to purchase another subscription to get this material. To access this material simply click 'View Full Document'

## Why people love StudySoup

Jim McGreen Ohio University

#### "Knowing I can count on the Elite Notetaker in my class allows me to focus on what the professor is saying instead of just scribbling notes the whole time and falling behind."

Janice Dongeun University of Washington

#### "I used the money I made selling my notes & study guides to pay for spring break in Olympia, Washington...which was Sweet!"

Jim McGreen Ohio University

#### "Knowing I can count on the Elite Notetaker in my class allows me to focus on what the professor is saying instead of just scribbling notes the whole time and falling behind."

Parker Thompson 500 Startups

#### "It's a great way for students to improve their educational experience and it seemed like a product that everybody wants, so all the people participating are winning."

Become an Elite Notetaker and start selling your notes online!
×

### Refund Policy

#### STUDYSOUP CANCELLATION POLICY

All subscriptions to StudySoup are paid in full at the time of subscribing. To change your credit card information or to cancel your subscription, go to "Edit Settings". All credit card information will be available there. If you should decide to cancel your subscription, it will continue to be valid until the next payment period, as all payments for the current period were made in advance. For special circumstances, please email support@studysoup.com

#### STUDYSOUP REFUND POLICY

StudySoup has more than 1 million course-specific study resources to help students study smarter. If you’re having trouble finding what you’re looking for, our customer support team can help you find what you need! Feel free to contact them here: support@studysoup.com

Recurring Subscriptions: If you have canceled your recurring subscription on the day of renewal and have not downloaded any documents, you may request a refund by submitting an email to support@studysoup.com