bcc macro 17 ch 7,10,15,11

bcc macro 17 ch 7,10,15,11 - 7 Introduction to Economic...

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7 Introduction to Economic Growth and Instability
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ECONOMIC GROWTH Growth as a Goal Arithmetic of Growth Rule of 70 70/ Interest Rate Example: If interest rate is 2%, 70/2=35 years for GDP to double
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ECONOMIC GROWTH An increase in real GDP over time Nominal – Inflation = Real An increase in real GDP per capita over time Per Capita GDP = GDP / Population Main Sources of Growth Increases in Resources Increases in Productivity
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The Business Cycle Level of Real Output Time Peak Peak Peak Recession Expansion Trough Trough Growth Trend O 7.1 Phases of the Business Cycle Cyclical Impact: Durables and Nondurables
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Unemployment Twin Problems of the Business Cycle Unemployment Inflation Measurement of Unemployment Labor Force Unemployment Rate Part-Time Employment Discouraged Workers Unemployment Rate Unemployed Labor Force = x 100 W 7.2
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Unemployment Under 16 And/or Institutionalized (70.5 Million) Labor Force, Employment, and Unemployment, 2005 Total Population (296.6 Million) Not in Labor Force (76.8 Million) Employed (141.7 Million) Labor Force (149.3 Million) (7.6 Million)
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Unemployment Types of Unemployment Frictional Unemployment Structural Unemployment Cyclical Unemployment Full Employment Defined Full-Employment Rate of Unemployment Natural Rate of Unemployment (NRU)
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Unemployment Economic Cost of Unemployment Potential Output GDP Gap and Okun’s Law GDP Gap Actual GDP Potential GDP = - W 7.3
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GDP Gap and Okun’s Law To calculate: GDP Gap = (Official Unemployment Rate – Natural Rate) X 2 Output Sacrificed = GDP Gap X Potential Unemployment
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GDP Gap and Okun’s Law Example: Official Unemployment Rate = 7%, Natural rate = 4% GDP Potential = $12 T GDP Gap = (7-4) X 2 = 6% Output Sacrificed = 6% X $12 = $72B
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Unemployment Unequal Burdens Occupation Age Race and Ethnicity Gender Education Duration Noneconomic Costs
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Unemployment Source: Bureau of Labor Statistics 0 5 10 15 U.S. Germany Italy Japan France 1995 2000 2005 Unemployment Rate (percent) Unemployment Rates in Five Industrial Nations, 1995-2005 GLOBAL PERSPECTIVE
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Inflation Inflation Defined Measurement of Inflation Consumer Price Index CPI Price of the Most Recent Market Basket in the Particular Year Price of the Same Market Basket in 1982-1984 = x 100
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How to Calculate the % Increase Between Any 2 Numbers New # - Old # / Old # Example: If the price of pizza rises from $10 to $12 $12 - $10 = $2 / $10 = 20%
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Inflation Source: Bureau of Labor Statistics -1 0 1 2 3 4 5 6 U.S. Germany Italy Japan France 1995 2000 2005 Inflation Rate (percent) Inflation Rates in Five Industrial Nations, 1995-2005 GLOBAL PERSPECTIVE
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Inflation Types of Inflation Demand Pull Inflation Cost-Push Inflation
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Inflation Who is Hurt by Inflation? Fixed-Income Receivers Savers Creditors (Lenders) Who is Unaffected or Hurt by Inflation?
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This note was uploaded on 06/05/2009 for the course ECO ECO2013 taught by Professor Jominy during the Summer '08 term at Broward College.

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bcc macro 17 ch 7,10,15,11 - 7 Introduction to Economic...

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