ec-26 - Chapter 7 I. Intro a. Inflation rate i. The annual...

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Chapter 7 I. Intro a. Inflation rate i. The annual rate of increase in average prices of all goods and services b. Central objectives of Macroecon i. Average level of prices (inflation and deflation) ii. Unemployment levels iii. Total production of goods and services II. Unemployment a. Intro i. Definition of unemployment 1. The # of adults who are actively looking for work, but do not have a job ii. Creates a cost to the entire economy in terms of lost input b. Historical unemployment rates i. Unemployment rates 1. The proportion of the measured labor force that is unemployed a. Labor force i. People 16+ years of age who either have jobs or are looking for them ii. The # of employed + # of unemployed c. Types of populations i. Employed ii. Unemployed iii. Not in the labor force
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d. Arithmetic determination of unemployment i. Intro 1. Definitions a. Departures i. Going from employed to unemployed b. Acquisitions i. Going from unemployed to employed c. Stock i. The quantity at of something at a given point in time 1. Example: the # of unemployed at a given point in time d. Flow i. A quantity measured per unit of time 1. Example: the # of people acquiring jobs over a given unit of time ii. Facts 1. If job departures = job acquisitions a. the unemployment rate stays the same 2. If departures > acquisitions a. Unemployment rate rises e. Categories of Individuals who are without work (largest to smallest) i. Job loser 1. Involuntarily lost job ii. Reentrant 1. At one time had a full-time job before, but has been out of the labor force iii. New entrant
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1. Has never had a full-time job for two or more weeks iv. Job leaver 1. Voluntarily ended employment f. Duration of employment i. An inc in the duration of unemployment can inc the unemployment rate 1. B.c. workers stay unemployed longer thus creating a greater # of them at any given time ii. When overall business activity dec. the duration of unemployment tends to rise 1. Thus accounting for much of the inc in the estimated unemployment rate g. The discouraged worker phenomenon i. Critics of the current unemployment rate believe that it fails to reflect the
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This note was uploaded on 04/19/2011 for the course ECON 200 taught by Professor Staff during the Winter '09 term at Indiana.

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ec-26 - Chapter 7 I. Intro a. Inflation rate i. The annual...

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