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Macro_Review_Midterm_2 - MacroReviewMidterm2(Chapter711...

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Macro Review Midterm 2 (Chapter 7-11)   Chapter 7  Unemployment   3.5-4.5% we consider it full employment  Unemployed: Able and willing to work but cannot find a job   Full employment: everyone who is willing and healthy is employed  Frictional Unemployment  Pg 160 What is the labor force? Pg 163 –discouraged work  4 types of unemployment:  Frictional: People searching for a job, not a danger to the American economy Seasonal:  Structural: lacking skills, cannot keep up with the new technology  Cyclical:  Business cycle: Ups and downs in business activity (recovery, peak, trough, recession)  What is aggregate demand?  C+ I+ G When unemployment went up to 7.5 % What did Bush do? He initiated tax cut to  increase consumer spending  Got Money by selling bonds with interest to individuals  To promote investment (I) you lower taxes (Ben B)  Government has influence on C and G but not I 
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To increase M: lower rate of interest, Frictional and Seasonal employment!!!  What are the 4 Types of unemployment and what causes this?
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Macro_Review_Midterm_2 - MacroReviewMidterm2(Chapter711...

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