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by: Hayden Massey

Notes CHEM 1120

Hayden Massey

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Practice *do not buy*
General Chemistry
Dr. Yngard
Class Notes
25 ?




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This 15 page Class Notes was uploaded by Hayden Massey on Wednesday March 2, 2016. The Class Notes belongs to CHEM 1120 at Auburn University taught by Dr. Yngard in Spring 2016. Since its upload, it has received 34 views. For similar materials see General Chemistry in Chemistry at Auburn University.


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Date Created: 03/02/16
Unemployment 10/30/2014 ▯ GDP: monetary amount of goods/services produced per year  C + I + G + Xn a. Limit Inflation = promote price stability b. Limit Unemployment ▯ ▯ Limit Unemployment ▯ ▯ Unemployment Rate = # Unemployed x 100 ▯ # in labor force ▯ - Percent of people in the labor force who want a job, but are not working.  Above 16 years old  Able and Willing to work  Not institutionalized (jails, hospitals)  Not in military, school full time, or retired ▯ Part time work is counted the same as full time * ▯ ▯ Frictional Unemployment  Temporarily Unemployed or between jobs  Qualified workers with transferable skills, but aren’t working  EX: high school/college graduates, fired & looking for a job  Seasonal Unemployment o Due to the time of the year and nature of the job o EX: Santa Claus ▯ Structural Unemployment  Changes in the structure of the labor force make some skills obsolete  Workers do not have transferable sills and these jobs will never come back  Workers must learn new skills to get a job  Permanent loss of these jobs is called “creative destruction”  EX: VCR repairmen, Carriage makers ▯ Cyclical Unemployment  Worst Type  Unemployment that results from economic downturns (recessions)  As demands for goods/services falls, demand for labor falls and workers are fired ▯ ▯ Frictional & structural are unavoidable  Make up Natural Rate of Unemployment (NRU) ▯ Full Employment = only natural rate of unemployment = no cyclical ▯ Normal amount of unemployment that we SHOULD have:  # of job seekers = # of job vacancies ▯ Approx. 4-6% is full employment ▯ Okun’s Law: When unemployment rises 1 % above the natural rate, the GDP falls by 2 %. ▯ France & Germany NRU: 8-10%  More generous unemployment benefits  takes away motivation to go back ▯ DOES NOT INCLUDE: (Hidden Unemployment)  Discouraged job seekers:  Part-time workers  Race/Age inequalities o Hispanics: 5.8% for January o African-Am.: 8.9% for January o Teenagers: 15.3% for January  Illegal Labor ▯ Underemployment: a measure of employment and labor utilization in the economy that looks at how well the labor force is being utilized in terms of skills, experience, and availability to work. Includes those workers that are highly skilled, but working in low paying jobs, workers that are highly skilled, but work in low skill jobs and part-time work that would prefer to be full-time. (OVERQUALIFIED) ▯ Economic consequences of Unemployment:  A loss of GDP  Loss of tax revenue  Inc. cost of Unemployment benefits  Loss of income for individuals  Greater disparities in the distribution of income ▯ Personal/Social Consequences of Unemployment:  Increased crime rates  Increased stress levels  Increased indebtedness  Homelessness  Family Breakdown ▯ ▯ ▯ Inflation: rising general level of prices; reduces the purchasing power of $ ▯ Measure Inflation:  Market Basket: made up of about 300 commonly purchased goods  Inflation Rate: % change in price in 1 year o CPI Yr. 2 – CPI Yr. 1 x100 CPI Yr. 1  Compare changes in prices to a given year (base year : 1982) ▯ ▯ Hurt By Inflation  Lenders: People who lend money at fixed interest rates  People with fixed incomes  People who save ▯ Helped by Inflation:  Borrowers: People who borrow money  A business where the price of the product increases faster than the price of resources ▯ Cost of Living Adjustment: Some works have salaries that mirror inflation. ▯ ▯ ▯ Consumer Price Index:  Base year is given an index of 100  To compare, each year is given an index # as well ▯ CPI = Price of the Market Basket Year 2 x 100 Price of the Market Basket Year 1  Problems with CPI  Substitution Bias: As prices increase for the fixed market basket, consumers buy less of these products and more substitutes that may not be part of the market basket. o RESULT: CPI may be higher than what consumers are really paying  New Products: The CPI market basket may not include newest consumer products o RESULT: CPI measures prices but not the increase in choices  Product Quality: The CPI ignores both improvements and decline in product quality. o RESULT: CPI may suggest that prices stay the same though the economic well being has improved significantly ▯ 3 Causes of Inflation 1. Gov’t prints too much money EX: Brazil, Peru, Germany after WW1 2. Demand Pull Inflation Demand increase but supply stays the same 3. Cost Push Inflation Negative supply shock increase the cost of production and forces producer to increase prices  EX: Hurricane Katrina Velocity of Money: Average times a dollar is spent and re-spent in a year c. M x V = P x Y d. (Money Supply) x (Velocity) = (Price Level) x (Quant. of Output) e. P x Y  GDP 1. Assume the velocity is relatively constant 2. Assume output is not affected (Y) ▯ 11/17 ▯ Phillips Curve: shows tradeoffs between inflation and unemployment ▯ Inverse relationship between unemployment and inflation ▯ Short Run ▯ ▯ Inflation LRPC ▯ ▯ ▯ ▯ ▯ SRPC Unemployment  During a recession, unemployment is high, but inflation is low ▯ ▯ Inc. in Unem., Dec. in Inf. = Dec. in AD  Dec. PL & Dec. Output/Real GDP ▯ ▯ Stagflation: High Unemployment, High Inflation ▯ ▯ In the long run, wages and resource prices increase. AS falls, SRPC shifts  ▯ LRPC is vertical at Natural Rate of Unemployment ▯ ▯ In long run, wages fall and there is no tradeoff between inflation and unemployment ▯ ▯ LRAS ▯ Price AS ▯ Level ▯ AD 1 ▯ ▯ ▯ AD ▯ GDP real ▯ When AS changes, the Phillips curve MOVES When AD changes, move ALONG the Phillips curve Unemployment Inflation GDP Growth ▯ Good 6% or less 1-4% 2.5-5% Worry 6.5-8% 5-8% 1-2% Bad 8.5% or more 9+% .5% or less ▯ ▯ ▯ 2. GDP Deflator a. Prices of all goods produced 3. CPI a. Measures prices of only goods and services bought by consumers 4. ** Increase in price of goods bought by firms or the gov’t will NOT show up in the CPI, but will in the GDP deflator 5. ** Imported goods are not shown up in the GDP deflator 6. GDP Price Deflator = Nominal GDP x 100 7. Real GDP Real GDP = Output x Base Year Price Nominal GDP = Output x Price ▯ Measured by change in real GDP over time ▯ ▯ 3 goal of all economies ▯ ▯ Economic Growth: An increase in real GDP over time ▯ ▯ Varies over time and from country to country ▯ ▯ Emerging economies such as Chinas and India have experienced rapid economic growth ▯ ▯ More developed countries have experienced more moderate growth (United States, England, etc.) ▯ ▯ Diagrams to Illustrate Growth: ▯ Aggregate Supply/Aggregate Demand Model ▯ PPC Model: ▯ ▯ ▯ Caused by increasing the employment of the factors of production ▯ ▯ Economic growth is shown by making better use of its existing resources and increasing GDP by moving towards full employment level of output (at LRAS) and the potential output (on a PPC) ▯ ▯ Cause of Economic Growth in the Long Run:  Increase in the quantity of factors of production  Increase in the quality of factors of production  Advances in Technology  Maybe through market forces or gov’t supply side policies ▯ ▯ Positive Consequence: ▯ ▯ Non-inflationary Growth: normal increase in AD followed by improvements in the supply side shift of LRAS; GDP Increase: No upward pressure on price. ▯ ▯ Improved Material Living Standards: Increase in national output  increase in national income  an increase in GDP per capita and higher incomes  higher standard of living ▯ Contributions to great leaps in Technology and Other Areas: advances in medicine, transportation, equipment, etc. have made life easier and more pleasurable ▯ Greater Tax Revenues: Allows gov’t to spend more on merit goods and public goods; tax systems can also redistribute income and reduce income inequalities ▯ Increase in the amount of foreign trade: An increase in output because of an increase in Exports  Increase in AD; Higher Incomes  higher demand for imports ▯ Increase in demands for Freedoms and Democracy: higher incomes  increase in levels of education and human capital  greater demand for freedoms ▯ ▯ Negative Consequences: ▯ ▯ Less Happiness: Sacrificing leisure time and personal relationships bc people are always wanting more ▯ Structural Changes in the Economy: larger share from primary sector to a larger share from secondary sector to a larger share from the tertiary sector; Results in structural unemployment and not everyone benefits to the same extent  inequalities may widen ▯ Negative Externalities: impact on the environment is increased; higher emissions of greenhouse gases; depletion of non-renewable natural resources; may threaten sustainability ▯ ▯ Formula for Growth Rate: ▯ ▯ (Real GDP in Year 2 – Real GDP in Year 1) x100 ▯ Real GDP in Year 1 ▯ ▯ Real GDP = C + I + G + Xn ▯ ▯ Definition of Unemployment:  Willing & able to work  Doesn’t currently have a job  Seeking work ▯ ▯ Labor Force  Above 16  Not institutionalized  Not military  Not full time students ▯ ▯ Unemployment Rate Formula ▯ ▯ Different types of unemployment ▯ ▯ Full employment = 4-6 % Unemployment = NRU (Natural Rate of Unempl.) ▯ ▯ On AS/AD Curve  Left of LRAS, high unemployment, above NRU, high inflation  Rights of LRAS, low unemployment, below NRU ▯ ▯ January 5, 2015 ▯ ▯ EMPLOYMENT ▯ ▯ 3 goals of society  stable prices o Low Inflation o Measured by CPI, PPI, and GDP deflator  full employment o Low unemployment o Measured by Unemployment Rate o # of Unemployed x 100 # in CLF  economic growth o Measured with GDP ▯ ▯ Unemployed = not working but actively seeking work ▯ ▯ Hidden Unemployment = cash labor, illegal labor, discouraged workers, part time ▯ ▯ Economic, Personal, and Social consequences of Unemployment ▯ ▯ Types of Unemployment  Frictional o Cause: Temporary Unemployment; looking for a job o SEASONAL: depends on season; ex. lifeguard o EX: Just out of college, Santa Clause  Structural o Cause: Structure of Job has changed; skills don’t match; technology change o EX: Record Player Makers  Cyclical: o Cause: Downturn in the Economy; demand-deficient o EX: People laid off because of economy ▯ ▯ ▯ Left of LRAS = Recessionary Gap = Higher NRU (> 4-6%) ▯ Rights of LRAS = Inflationary Gap = Lower NRU (< 4-6%) ▯ ▯ Decrease In AD or AS = Shift Left ▯ Increase In AD or AS = Shift Right ▯ ▯ INFLATION ▯ ▯ Deflation = Prices going down ▯ Disinflation = Slowing in the rate of inflation ▯ Inflation = Prices going up ▯ ▯ CPI – market basket  Problems using CPI  Calculate CPI  Base Year = Index 100  Following years should have value over 100 ▯ ▯ Demand Pull Inflation ▯ Cost Push Inflation ▯ ▯ ECONOMIC GROWTH ▯ ▯ Review Economic Growth  PPC  Consequences  Change in GDP formula ▯ ▯ ▯ QUESTION: What is something specific you would say about structural unemployment?  Skills do not match jobs; usually due to technology change


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