ECON notes 3-28

ECON notes 3-28 - Unemployment and Inflation Frictional...

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Unemployment and Inflation Frictional unemployment> transaction costs >people don’t know where best jobs are Structural umemployment> skills don’t match up to job Condinen(?) came up with this In year 2013 you make $100,000 and consulting firm gives you a job for $200,000, but fired at end of the year Go tback to old company if get $20,000 raise, company agrees Path A - $100,000 to $200,000 then $120,000 in year Path B - $100,000 then $120,000 Path B doesn’t confer to economic reasoning People prefer Path B because it’s not level that matters, first derivative matters (going up or going down) Condinen concluded that psychic theory is more important Induced Unemployment> increases in acting activity provide incentive for more of activity > people will choose to be unemployed if high unemployment compensation > if min. wage exceeds equilibrium more people will be unemployed * manifestation of government laws and regulations Free trade v. fair trade > greedy capitalists going into toher countried and hiring people at lower wages
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This note was uploaded on 06/22/2008 for the course ECON 101 taught by Professor Balaban during the Spring '07 term at UNC.

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ECON notes 3-28 - Unemployment and Inflation Frictional...

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