ECON 205 Lecture (2.25.2008)

ECON 205 Lecture (2.25.2008) - disasters, etc.)-Schumpeter:...

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ECON-205 Lecture 2-25-2008 Chapter 6 Factors of unemployment: age, gender, education Types of unemployment - Frictional - Structural - Seasonal - Corporate inflation o Cars example Steel prices rise Government regulation (safety – seatbelts, airbags, etc.) Appreciation of the currency\ Long time ago, $1 = 375 yen… now $1 = 110 yen - Cyclical o Peaks and troughs (downward slope is recession) o What causes business cycles? Two theories Non-economics factors o Psychological attitude o Weather o Union strike Economic factors o Invention and innovation o Policies of financial institutions o Depreciation and replacement Theories of business cycle - Professor Duesenbury: caused by different types of shocks (wars, scandals, natural
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Unformatted text preview: disasters, etc.)-Schumpeter: said that business cycles are caused by technological innovations-Hobson: said that overproduction causes business cycles people eventually get laid off-John Keynes (1936): what causes business cycles is underconsumption. Capitalism needs continuous spending. Aggregate demand = cumulative demand. Economic prosperity of 1922-What caused this economic prosperity? o Strong demand for capital goods. o Development of new products and industries. Automobile, petroleum, etc. o Decline in labor costs due to new techniques. o Booming in residential housing o Development of the banking system Fixed rate of exchange for 30 years...
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This note was uploaded on 09/26/2009 for the course ECON 205 taught by Professor Kamrany during the Spring '07 term at USC.

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