ECN 211 L13 Unemployment_BB

ECN 211 L13 Unemployment_BB - ECN 211 Macroeconomic...

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10/05/09 1 ECN 211 Macroeconomic Principles L13: Unemployment and Inflation
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10/05/09 2 Output, Unemployment and Inflation Questions: What are business cycles? How is unemployment defined and measured? What is the cost of unemployment?
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10/05/09 3 Business Cycles … pattern of ________ real GDP followed by __________ real GDP Recession … a period in which real GDP _________ Usually at least 2 quarters to a year Depression … a severe and prolonged economic contraction “the great depression in the 30’s” Around 25% of the labor force was unemployed.
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10/05/09 4 Trend growth has been around 3-4% per year (on average) Real GDP begins to _____ Real GDP begins to _______
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10/05/09 5 Expansion (boom) – real GDP is ________ Contraction – real GDP is ___________
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10/05/09 6 Indicators of the Business Cycle _________ Indicator … a variable that changes before real output changes Used to forecast changes in output Not always successful! Examples: consumer expectations and Stock prices “stock prices have predicted ___ of the last ___ recessions.” ____________ Indicator … a variable that changes at the same time that real output changes Example: industrial production and Personal income
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_________ Indicator … a variable that changes after real output changes Example: unemployment duration, labor cost per unit of output. 10/05/09 7
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10/05/09 8 What Causes Business Cycles? Keynesians – too little demand
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This note was uploaded on 03/16/2009 for the course ECN 211 taught by Professor Kingston during the Spring '08 term at ASU.

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ECN 211 L13 Unemployment_BB - ECN 211 Macroeconomic...

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