econ exam 3

econ exam 3 - Test 3 10/20/10 A. Economic Growth 1....

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Test 3 10/20/10 A. Economic Growth 1. Definition a. an economy is growing if it is producing more goods and services than it did at a previous time 2. Measure a. GDP: Gross Domestic Product i. how much we are producing and how much it changes in a given period 3. Major Issue: Fluctuations Over Time a. economies don’t grow at the same rate from one period to the next b. Long Run: Changes in Productivity i. long run = calendar time in macroeconomics ii. periods of 50, 100, 200 years (long time) c. Short Run: Business Cycle i. normal fluctuations in economic growth i. expansion, recession are both fluctuations in the business cycle d. Recession, Depression, Expansion i. recession: shrinking of the economy in a given period ii. expansion: enlargement of the economy in a given period iii. depression: a non-technical term for a protracted and severe recession e. Example: Productivity (“procyclical”) B. Unemployment: The Basics 1. Definitions a. Unemployment Rate = (number of people unemployed/ labor force) * 100 b. Labor Force Participation Rate (LFPR) (labor force/ 2. Measurement: BLS Household Survey a. Employed i. also includes those working more than 15 hours without pay in a family business ii. also, those absent from work for a variety of reasons are also counted as employed b. Unemployed i. have no employment during the reference week ii. must have been available for work at that time iii. had to have made a specific effort to find work c. Not in Labor Force i. active duty military excluded ii. institutionalized people are excluded (mostly prisoners) iii. everyone under the age of 16 is excluded iv. retirees v. housewives vi. full-time students d. Labor Force = a + b 10/25/10 A. Unemployment 1. “True” Problem of Unemployment
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a. wasted resources b. infrastructure is affected for the present and into the future i. e.g.: a house not built today means workers going unpaid and potential shelter for people not existing c. people who are counted as employed but only work a small amount during any given week are underemployed d. discouraged workers (people who have stopped looking for more than 4 weeks) are also excluded from the pool of unemployed and aren’t factored into the unemployment rate 2. Relationship with the business cycle a. countercyclical, with a lag i. move against the business cycle (growth = shrinking unemployment rate) ii. there is a gap in time between upstart of growth and the decrease of the unemployment rate B. Unemployment: Four Types 1. Frictional (“The Good”) a. Definition i. also called “search unemployment” ii. at the time when someone is unemployed, they are searching for a good job match b. Short-term; desirable i. allows businesses to operate at their most efficient because the eventual employee will be the most qualified for the position c. Examples i. If there is an unemployed person looking for a job and finds one with a skills,
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This note was uploaded on 10/19/2011 for the course ECON 2030 taught by Professor Bong during the Spring '07 term at LSU.

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econ exam 3 - Test 3 10/20/10 A. Economic Growth 1....

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