Powerpoint Presentation 2

Powerpoint Presentation 2 - Macroeconomics Dr Safarzadeh...

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Macroeconomics Dr. Safarzadeh Chapters 6 - 12
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Chapter 6   Monitoring Cycles, Jobs, & the Price Level Unemployment:  People of age 16 or older who are not  retired, have been looking for a job for the past 4 weeks, and  are not able to find a job Labor Force = Employed + Unemployed
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Chapter 6   Monitoring Cycles, Jobs, & the Price Level Some Labor Statistics: Population in the U.S.A almost 300 million, working age population 240 million, not in labor force 80 million, in labor force 160 million. Business Cycles: Expansion, Peak, Recession, Trough Distinction Between Nominal Wage and Real Wage: Real Wage is the quantity of goods and services that an hour of labor can buy. Real Wage = (Nominal Wage) / (Price Level) Real Wage and Money Illusion: As price level increases real wage decreases. The decrease in wage hurts labor and increases profit of the business. This may result in expansion of output.
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Chapter 6   Monitoring Cycles, Jobs, & the Price Level Cyclical Unemployment: Unemployment due to business  cycles. Seasonal Unemployment:   Unemployment in seasonal  professions. Natural Rate of Unemployment: Sum of frictional and structural unemployment. Corresponds to full-employment . Frictional Unemployment:   Unemployment due to new  comers to job market and transition from one job to  another.  Structural Unemployment:    Unemployment due to  changes in technology.
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Chapter 6   Monitoring Cycles, Jobs, & the Price Level   Wage Determination:   By Collective Bargaining:  Less than 25% of Workers,  Mostly Low-Skilled Workers BY Individual Bargaining:  75% of Labor and Mostly  High-Skilled Labor. Unemployment Rate is an Average for Nation.  It varies  with  race, region, age, and gender.   Reservation Wage:   A Wage that Labor is Indifferent  Between Working and Being  Unemployed.
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Chapter 6   Monitoring Cycles, Jobs, & the Price Level Efficiency Wage:   A Wage that Makes Labor  Committed to  Work and Feel Good about The Job. Economic Theory of Wage Determination:   Wage is  decided in the labor market through interaction of  demand and supply for labor.    Aggregate demand for labor is the horizontal sum of  demand by firms.  Demand for labor by firms is the same  as the  marginal product of labor . Supply of labor is decided through  utility-maximizing   behavior of labor, a  choice between income and leisure .
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Chapter 6   Monitoring Cycles, Jobs, & the Price Level Inputs          Production Function         Output Y = AF(L, K)    Y:   Output        L:   Labor Input         K:   Capital Input       A:   Technology Factor (Labor, Land,  Capital) Production Function and Demand for Labor:   Production Function:  The Most Efficient Combinations of  Labor and Capital inputs that Produce Maximum level of  Output. 
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