Macroeconomics Chapter #6
Macroeconomics Chapter #6 eco 105
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This 3 page Class Notes was uploaded by Daniel Hong on Saturday October 10, 2015. The Class Notes belongs to eco 105 at Pace University taught by Mark Weinstock in Fall 2015. Since its upload, it has received 46 views. For similar materials see Principles of Economics: Macroeconomics in Economcs at Pace University.
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Date Created: 10/10/15
Chapter 6 Unemployment and In ation The Unemployed Individuals who do not currently have a job but are actively looking for work 0 Actively looking is critical How is unemployment defined and measured Labor force the total number of workers both the employee and the unemployed Labor force employed unemployed o The size of the civilian labor force is important 0 That is how we calculate the unemployment rate with the civilian labor force Unemployment Rate the percentage of the labor force that is unemployed 0 51 in the United States is the unemployment rate today Unemployment Rate unemployedlabor force x 100 Labor Force Participation Rate the percentage of the population over 16 years of age that is in the labor force Labor Force Participation Rate Labor ForcePopulation 16 years and older x 100 Hysteresis if you don t do your job for a while then you get rusty Fall out of the pattern and you won t be productive Why should we even hire you if you don t really do your work Your knowledge can go down Not keeping up with the updates being lazy 0 Once the unemployment runs out then you are going to look for a job more seriously Youth Unemployment is a special category aged 1625 Alternative Measures of Unemployment and Why They Are Important Discouraged Workers Workers who left the labor force because they could not find their jobs Unable to find a job that they feel comfortable with in doing for a living 0 There are different reasons why people can t nd jobs 0 They like a job but they just stopped looking for one Who Are the Unemployed Seasonal Unemployment the component of unemployment attributed to seasonal factors Lifeguards because the pool season is not yearround Types of Unemployment Cynical Frictional and Structural Cyclical Unemployment Unemployment that occurs during uctuations in real GDP 0 Fluctuations in GDP is the business cycle Frictional Unemployment Unemployment that occurs with the normal workings of the economy such as workers taking time to search for suitable jobs and forms taking time to search for qualified employees Structural Unemployment Unemployment that occurs when there is a mismatch of skills and jobs 0 Hard Skills and Soft Skills are both very important in finding a job 0 If you talk in a way that you think is cool cussing then you won t get hired because you are not talking like a well civilized employee 0 Something that you never want to be 0 There should always be structural unemployment because of people needs to be placed into their great skills innovation Innovation is so important Root of Unemployment 0 Drop out of school 0 Get pregnant at a young age 0 Make dumb and uncivilized choices Part Time 0 You are employed Not unemployment 0 But full time gets more benefits U3 does not count discouraged workers and unemployment U6 does count them Epop employment to population ratio Seasonal Employees The component of unemployment due to the seasons Natural Rate of Unemployment Natural Rate of Unemployment the level of unemployment at which there is no cyclical unemployment It consists of inly frictional and structural unemployment 0 0 cyclical unemployment 0 But you still got frictional and structural unemployment Labor mobility is high in the United States example if you can t nd a job in New Jersey then you can go nd a job in Pennsylvania But you can t do this in Europe because of language Potential GDP the GDP that your country could achieve if unemployment is at the natural rate 0 No cyclical and frictional then it is considered potential GDP 0 They want GDP to be close to potential as possible 0 If your below potential GDP then you have a problem with unemployment 0 Potential GDP minus Real GDP Gap 0 CBC measures potential GDP They have a lot of models to measure potential GDP but you should not 100 rely on them because they are not always correct Negative GDP Potential GDP gt Actual GDP Positive GDP Potential GDP lt Actual GDP 0 This is not good because it can lead to in ation Full Employment the level of unemployment that occurs when the unemployment rate is at the natural rate Unemployment Insurance payments unemployed people receive from the government Longterm Unemployment Go more than 26 weeks of looking for a job Consumer Price Index a price index that measures the cost fixed basket of goods chosen to represent the consumption pattern of a typical consumer We have 12 federal reserves NYC Federal Reserve is 2