Week 5 lecture notes - Macroeconomics
Week 5 lecture notes - Macroeconomics ECON 2105 080
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This 4 page Class Notes was uploaded by Gunawork on Sunday September 27, 2015. The Class Notes belongs to ECON 2105 080 at Georgia State University taught by Brian Hunt in Fall 2015. Since its upload, it has received 33 views. For similar materials see PRINCIPLES OF MACROECONOMICS in Economcs at Georgia State University.
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Date Created: 09/27/15
MacroEcon 2105 Week 5 Lecture Notes Chapter 7 Recap of week 4 s lecture on chp 7 Big questions What are the major reasons for unemployment What can we learn from unemployment data policy induced How does the market reapply people w nominal wage Real wage w price level As the coef cient goes up the denominator goes down Continuation ofchp 7 in week 5 3 types of unemployment Unemployment Rate during Recession Cyclical Bad gt N gt Natural Frictiond Frictional Unemployment J Unemployment Rate Always during Normal occurring Macroeconomic denoted as u Conditions Cyclical gt Caused by economic downturns The worst kind of unemployment Fiscal and monetary Natural rate of unemployment Full employment output Frictional gt Unemployment caused by time delays in matching available jobs and workers Structural gt Unemployment caused by changes in the industrial makeup structure of the economy and new industries are created and old ones are destroyed Industrial improvement Growing and changing economies The Evolution of Jobs in the United States Percentage 100 ofworkforce 90 8096 7096 6096 5096 4096 3096 2096 1096 096 1800 1820 1840 1860 1880 1900 1920 1940 1960 1980 2000 2010 Service Industry Agriculture Measuring unemployment in the United States April 2012 Relevant Population 243 million Noninstitutionalized Civilian Aged 16 Not in Labor Force 89 million Labor Force 154 million Students Homemakers Retirees Others j Employed 142 million Unemployed 12 million 919 of labor force 81 of labor force Shortcomings of the Unemployment Rate Discouraged workers People who want a job but get discouraged and give up looking for work Are not included in the labor force and not considered unemployed Unemployed workers Parttime workers who want fulltime jobs Workers who are very overquali ed at their job Considered employed Equations Labor force participation rate f Labor Force Pa1t1c1pat1on rate M x 100 population Unemployment rate Unemployment rate u of unemployed labor force X 100 Chapter 8 Price Level and In ation the lecture will continue in week 6 How is in ation measured What problem does in ation bring 9 v General trend and price level In ation Has the power to redistribute Is more demand driven It reduces the buying power of your money 9 v Commodity price In ation PV FV 1r 11 11 number of periods r interest rate PVC1 1 rnC21 r2C31 r3 Cnl rnFV1 rn 0 v Actual income stream is What matters 0 v As a debtor you don t want de ation which increases debt burden Consumer Price Index CPI CPI A measure of the price level based on the consumption pattern of a typical consumer Goal include everything purchased by a typical consumer to get a measure of the cost of living P X Q Market Value High in ation is the DEVIL How do you bring unemployment down 339 Consumption tax What prices are included in the CPI The Pieces of the Consumer Price Index March 2012 Other 9 d5 Education and services 3 3 Apparel Communication 4 4 o Recreation 6 Medical care HOUSing 700 41 00 Food and beverages 1 5 o Transportation 1 7 o Housing has the highest percentage