EC1301_-_Lecture_7_-_Unemployment_and_Inflation

EC1301_-_Lecture_7_-_Unemployment_and_Inflation - EC1301...

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1 EC1301    Unemployment and Inflation ©  Connie CHUNG LECTURE 7  Section 2 UNEMPLOYMENT  AND INFLATION
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2 EC1301    Unemployment and Inflation ©  Connie CHUNG Agenda Examining unemployment  Alternative measures of unemployment  Three types of unemployment Natural rate of unemployment Costs of unemployment  Consumer Price Index and the Cost of Living  Problems in measuring changes in prices  Inflation/ Deflation  
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3 EC1301    Unemployment and Inflation ©  Connie CHUNG Objectives 1. Examine the nature and causes of  unemployment 2. Examine how unemployment is defined  and measured  3. Understand the  Consumer Price Index  (CPI)  and how it is related to the cost of  living  4. Understand why  inflation  imposes costs  on society
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4 EC1301    Unemployment and Inflation ©  Connie CHUNG Key Terms anticipated inflation deflation full employment labor force natural rate of unemployment unemployed consumer price index (CPI) discourage workers Hyperinflation labor force participation rate seasonal unemployment unemployment insurance cost-of-living-adjustments (COLAs) employed individual working part-time for economic reasons shoe-leather costs marginally attached workers structural unemployment unemployment rate cyclical unemployment frictional unemployment inflation rate menu costs unanticipated inflation
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5 EC1301    Unemployment and Inflation ©  Connie CHUNG Connie’s Reflections….. 1980s  –  Job Security Early-mid-1990s  –  A Paradigm Shift     Employability   – “relevant” skills-based      Restructuring  – “Re-engineering”    Retrenchment / “Golden-Handshake”  2000s   –  Jobs outsourcing    Domestic  –  contract jobs to third parties (human       resource management, accounting, IT operations and       management, call-centers)       Overseas  – to China (back-office ie. accounting), India       (call-centers, medical (x-ray reports), tuition hotlines),       Dell Computers sales and technical support center in       Penang, Malaysia      “Age” issue for 40 and above  Retraining/ change mindset/ “entrepreneur” 
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6 EC1301    Unemployment and Inflation ©  Connie CHUNG Examining Unemployment The unemployment rate is closely tied to the  overall fortunes of the economy   During periods of  poor   economic      performance , such as  economic recession       when  real GDP declines  - unemployment      rises sharply and a cause of public concern   During periods of  good   economic       performance  and  rapid economic growth  –      unemployment is reduced but does not      disappear    
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7 EC1301
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