Exam 3 econ - Econ Exam 3 A. Practice Problems 1. Chapter...

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Econ Exam 3 A. Practice Problems 1. Chapter 24: 1, 2, 4, 5, 7-10, 12, 13, 15, 17 II. SUBSTANCE A. Economic Growth 1. Definition: The economy is growing if it is producing more stuff in one period of time than it did in another period of time. 2. Measure: we look at the percent change in the amount of change in stuff we are producing. GDP. 3. Major Issue: Fluctuations over time -The economy doesn’t grow at a steady rate from here to eternity. a. Long Run: Changes in Productivity -Decades and centuries in macroeconomics. -Main determinate in the growth rate is the change in productivity. (The more you produce in one hour the more growth.) b. Short Run: Business Cycle (The economy goes up or down) -from year to year, quarter to quarter, there will be a lot of fluctuation in our rate of growth. c. Recession, - Periods of negative economic growth. Depression- Very long and severe recession Expansion- periods of economic growth. d. Example: Productivity (“procyclical”) -Procyclical: follows the business cycle (interest rates) -Countercyclical: against the business cycle. A. Practice Problems 1. Chapter 24: 1, 2, 4, 5, 7-10, 12, 13, 15, 17 II. SUBSTANCE A. Unemployment: The Basics 1. “True” problem of unemployment 2. Relationship with the business cycle a. Countercyclical, with a lag - Unemployment goes down when economy is good - Not a perfect relationship - the lag- When recession is over there is no immidate change in the unemployment rate B. Unemployment: Four Types 1. Frictional (The Good) a. Definition: A job opening is available and there is a skills match, But you don’t know all the availabilities -Search Unemployment- b. Short-term; desirable and inevitable -There are always people entering the labor force and there are always people leaving. c. Examples - Individual looking and business seeking (Both Individual) 2. Structural (The bad) a. Definition: Job opening but there is no skills match or a geographical separation. b. Long-term; undesirable and inevitable -No one needs their skills c. Industry wide OR Regional -There will always be industries growing and others shutting down d. Examples 1-Textile industries shutting down. No one will need your skills anymore 2-Health care industry growing: Their skills are needed. 3- You lose your job in Ohio and a new job opens in New York. You can’t Commute (Regional Related) e. How to deal
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- If you move for business purposes more than 50 miles you can write off your moving expenses on your income tax. - Government investments in training or Providing people with skills. 3. Cyclical (The ugly) a. Definition- Unemployment related to the Business Cycle (Recession). No job opening available. (Surplus of workers) b. Macro Level - Unemployment Rates increase all over c. Short or long-term; very undesirable; policies - Depends on how long recession is - Waste of resources. d.
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Exam 3 econ - Econ Exam 3 A. Practice Problems 1. Chapter...

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