Macro Class Notes Week 6
Macro Class Notes Week 6 ECON 2013
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This 5 page Class Notes was uploaded by Winston on Thursday September 29, 2016. The Class Notes belongs to ECON 2013 at University of Arkansas taught by Stapp in Fall 2016. Since its upload, it has received 17 views.
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Date Created: 09/29/16
Tuesday 09/27/16 1. U.S. Population a. About 330,000,000 2. U.S. Labor Force a. About 130,000,000 3. What is the “labor force”? a. Age 16 to 65 b. Not institutionalized c. Not in college 4. Unemployment a. Actively seeking a job and don’t have one 5. Unemployment Rate a. U i. Percentage of the labor force, actively looking for a job and not being able to find one 6. Bauru of Labor Statistics a. Surveys 55,000 households each month to determine unemployment rate, average wages, hours worked, unemployment claims, etc… 7. Three (3) Economic Evils a. Stagnant economic growth b. Extreme inflation c. Extreme unemployment 8. Any unemployment rate always understates the actual unemployment rate because it leaves out seasonal unemployment 9. Types of Unemployment a. Seasonal Unemployment i. People are unemployed at certain times of the year, because they work in industries where they are not needed all year round. Examples of industries where demand, production and employment are seasonal include tourism and leisure, farming, construction and retailing 1. Because of time of the year a. Lawn mowing b. Lifeguards c. Construction i. Rain days 2. Temporary 3. Voluntary 4. NOT included in unemployment rate b. Frictional Unemployment (Search Unemployment) i. The unemployment which exists in any economy due to people being in the process of moving from one job to another 1. Occurs when people are (must be looking for job): a. Moving i. Careers ii. Jobs iii. Geographical locations iv. Resources relocate 1. CELL a. Capital b. Entrepreneurship c. Land d. Labor b. Quitting a job i. Must be looking for a new job c. We can estimate this i. About 2% c. Cyclical Unemployment i. Workers losing their jobs due to business cycle fluctuations in output, i.e. the normal up and down movements in the economy as it cycles through booms and recessions over time 1. Caused by: a. Current economic conditions i. Recession ii. Layoffs 1. Involuntary 2. Unpredictable a. Could be 0% in theory i. Never will be b. Decreased Aggregate Demand (AD) i. Solution 1. Increase AD a. How do you do that? i. Depends on which type of economist one is *see ii <<* ii. Solutions to C and Ig decreasing 1. Monetary policy wants to fix this by increasing the ms and decreasing i (some central banks have actually gone to negative i) a. This is supposed to increase C i. Which would lead to an increase in Ig 2. Fiscal policy attempts to fix this through increased G (government spending) and adjusting taxes a. John Maynard Keynes i. Keynesian Economics ii. G needs to increase when C and Ig fall 1. “Throw money at the problem” 2. “For every dollar C and Ig decrease, G needs to increase (a dollar) d. Structural Unemployment i. Caused by people lacking currently marketable (in demand) skills ii. Example: (goes in, then out, then in) 1. Stage coach drivers a. Pulled by horses i. Need horse shoes 1. Need blacksmiths a. Cars invented ii. Fewer stage coach drivers b. Fewer horses needed 2. Fewer horse shoes needed a. Fewer blacksmiths needed i. Stage coach drivers, horses and blacksmiths all had skills that were no longer needed (in demand) iii. Two types of people are in this type of unemployment 1. Overqualified a. Not a big worry i. Usually able to retrain themselves 1. Can learn new skills a. Become marketable 2. Underqualified a. Worry i. “Long term unemployed” 1. Lack education and basic skills a. Solution = qualify them i. How? ii. Minimum wage? 10.*Picture* 11.Treasury auction in October 12.Printing money a. Done by the Fed to cover the over-spending of the U.S. Federal Government i. They call it “Quantitative Easing” 1. QE for short b. When a central bank purchases the debt of its country i. Approaches to do this by the Fed (U.S. central bank) 1. QE has had three (3) phases a. QE1 i. Short term ii. Limited purchase of debt b. QE2 i. Time limit set 1. Purchased debt during that time c. QE3 i. Long term ii. “QE Infinity” iii. Diversify portfolio 1. Purchase: a. Corporate debt b. Government debt 13.Monetary policy a. Central bank’s manipulation of ms (money supply) and i (interest rate) 14.Fiscal policy a. Government manipulation of their spending (G) and taxes (T) 15.T = taxes 16.Japan study abroad started in 1998 by Stapp Thursday 09/29/16 1. Initial jobless clndms were less than expected 2. Final revision of 2 quarter GDP a. GDP increased 1.4% i. Revised up from 1.1% 1. Still less than we need according to Stapp (says 2% needed) 3. Homework #1 a. Pick a presidential candidate i. Outline their economic platform 1. Don’t just copy and paste a. Understand it ii. Will that work? 1. Why? 2. Why not? 4. Types of unemployment a. *recap of what was said on first three types (seasonal, frictional, th cyclical) and added 4 type *added new info to notes from Tuesday ^^* 5. Most representatives (in U.S. government (House, Senate)) are lawyers 6. No republican has ever won the presidential election without winning Ohio 7. Types of lag a. Recognition Lag i. Time period from when the problem starts to when you realize there’s a problem 1. Time from being infected with the flu to seeing that you’re sick and have the flu b. Policy Lag i. The time period from when you recognize the problem to when you realize a solution and put it into policy 1. Time from recognizing you have the flu to going to a doctor and getting medicine c. Implication Lag i. Time from when you put a policy into effect to when it actually takes effect 1. Time from taking medicine for the flu to being cured 8. How long is this lag? a. Fiscal policy i. About 2 years b. Monetary policy i. About 1 year 1. Doesn’t mean it’s better or easier c. Problem is: i. When the solution finally takes effect, it might be the wrong policy 1. Can cause inflation 9. You have to have a college degree to be an officer in the U.S. armed forces 10.Skilled workers are paid more than unskilled workers 11.Labor Unions (mostly made of skilled workers) support the minimum wage because they believe it will raise how much skilled workers are paid as well 12.Arguments against minimum wage a. Minimum wage is an artificial boost in pay (value of work (value of production)) i. Raises the costs of benefits 1. Makes firms less competitive a. Have to charge more 13.Arguments for minimum wage a. Minimum wage gives people more money: i. To spend ii. To get off government benefits nd 14.In the 2 quarter a. Business spending i. Structures 1. Down 2.1% ii. Equipment 1. Down 2.9% 15.J.F.K a. In 1961 i. We need to get a man to the moon and back (before Russia, who had Sputnik) 16.Who was the first man on the moon? Which mission? When? a. Neil Armstrong, Apollo 11, 1969 17.Who was the first person to fly over the Atlantic? a. Charles Lindborg i. Started PanAm 18.When was the last time we went to the moon? How many people have walked on the moon? How many times did we go to the moon? a. December 11, 1972 – Apollo 17 b. 12 people have walked on the moon i. All men, no women ii. All U.S. astronauts c. Six (6) times with men (successful landings) 19.More young people are unemployed than older people a. No experience i. Someone has to take a chance by employing them 20.Teenage women have a lower unemployment rate than teenage men
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