It reflects whats happening to the overall level of

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Unformatted text preview: = P 1997 x y 1998 $15.00 = $5 x 3 GDP Deflator Nominal GDP GDP deflator = 100 Real GDP Measures the price of output relative to its price in the base year. It reflects what’s happening to the overall level of prices in the economy. used to track price movements in the economy this is (price today*quantity today)/(price last year*quantity today) GDP deflator vs CPI both track inflation • Both are measures of inflation. • The GDP deflator measures the prices of all goods produced. • The CPI measures prices of only the goods and services bought by consumers. • The GDP deflator compares the price of currently produced goods and services to the price of the same goods and services in the base year. • The CPI compares the price of a fixed basket of goods and services to the price of the basket in the base year Unemployment • A person is employed if he or she has spent most of the previous week working at a paid job. • A person is unemployed if he or she is: – on temporary layoff – is looking for a job – is waiting for the start of a new job • A person in neither category is not in the labor force. Breakdown of the U.S. Population and the Labor Force group of interest The Unemployment and Employment Rates • Unemployment Rate: # unemployed/CLF *100 • Employment Rate: # employed/civilian NI population *100 • Labor Force Participation Rate: fraction of working age population who are either employed or actively seeking work (unemployed) = # employed + # unemployed Types of Unemployment moving between jobs in the same industry • Frictional: Transitional unemployment due to people moving between jobs: Includes people experiencing short spells of unemployment (Short Term) when the entire economy goes under a change and that change causes the unemployment • Structural: Arises from the mismatch of skills and job opportunities as the pattern of labour demand in the economy changes (Long Term). Example: As the coal industry declined, many miners had difficulties utilising their skills to find work in new industries such as IT and service sector work. An example of structural change in the economy...
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