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Macroeconomic Concerns: Unemployment, Inflation and Growth

Macroeconomic Concerns: Unemployment, Inflation and Growth...

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Econ 4.3 Monday, February 15, 1999 Announcements: Lecture notes: Chapter 8: Macroeconomic Concerns: Unemployment, Inflation and Growth Nominal GDP Nominal GDP is GDP measured in current dollars Current Dollars: the current price that one pays for goods and services GDP Component, 1998 ($ billions)
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GDP = C + I + G + (EX - IM) $8,508.9 Consumption (C) $5,806.0 Investment (I) $1,369.2 Government (G) $1,487.8 Net Exports (EX - IM) - $157.1 GDP = $7,549.9 ($92) Inventories o Desired Inventories : what is ordered and what is expected to sell o Undesired Inventories : what is not expected to sell Recession Recession : A recession is a period in which real GDP declines for at least two consecutive quarters. Most recessions are marked by falling output and rising unemployment Depression : a prolonged and deep recession Great Depression: 1929 - 1933
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The Recession of 1980-1982 Defining Unemployment Employed : any person 16 years or older, (1) who works for pay, either for someone else or in their own business, for one or more hours a week,
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Unformatted text preview: (2) who works without pay for 15 hours a week in family business, or (3) who has a job but has been temporarily absent, with or without pay. • Unemployed : A person 16 years or older who is not working, is available for work, and has made specific efforts to find work during the previous four weeks. • Labor Force : The number of people employed plus the number of unemployed • Labor Force = Employed + Unemployed • Population = Labor Force + Those Not in Labor Force • Unemployment Rate = Unemployed / Labor Force • Labor Force Participation Rate = Labor Force / Population Unemployed Rates and Demographics • 11/1982 1/1998 Total 10.8 % 4.7 % White 9.6 % 4.0 % African-American 20.2% 9.3% Types of Unemployment • Cyclical : due to business cycle movements in GDP • Frictional : due to job search activities • Structural : due to changes in economic institutions, geographic displacement, technological change, discrimination...
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