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Unformatted text preview: Macroeconomic Goals: 1. High growth rate (of real GDP). Causes: (1) Increases in land, labor capital and (2) advances in technology (know-how). a. Benefits i. High standards of living (quantity and quality of things we consume) ii. High employment b. Costs i. Irreversible damage to environment, pollution, etc. 2. Low unemployment rate (u = unemployed labor force) a. Costs of unemployment i. Economic cost (lost output) ii. Social costs (loss of self esteem, increased crime, etc.) iii. Hysteresis (unemployment could have long-lasting effect on earning potentials) b. Benefits of unemployment (or recession, because unemployment happens in a recession) i. Lower inflation rate (because unemployment results in lost income and reduced demand for goods and services) ii. Increased efficiency of business firms (they learn to produce with fewer workers) iii. Lower imports (because of lower income due to unemployment. Bogus argument, imports are not necessarily bad) 3. Low and stable inflation rate (rate of change of price level)...
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This note was uploaded on 03/24/2010 for the course ECON Econ1B taught by Professor Baghermodjtahedi during the Spring '09 term at UC Davis.
- Spring '09