Lecture 13(post)

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Unformatted text preview: to the issues of inflation, deflation, hyperinflations and “real” changes in macro aggregates. • Introduced two price indices – The Implicit GDP Deflator Index – The Consumer Price Index • There are several others. • • • • • • • • Why Do We Care About Inflation? Its potential to change the distribution of income. Its special effects on debtors & creditors. The costs of “keeping up” might be self-fulfilling. Resources (time and money) are used up in the mere act of posting and keeping up with price changes and searching for low prices. Increased likelihood that people don’t know (or can’t keep up with) changing relative prices, so they don’t allocate efficiently. Increased uncertainty, pessimism and risk, perhaps making people tentative and investment riskier depresses expenditure on consumption and investment. Real Culprit: asymmetric and unanticipated inflation What about DEFLATION? Decreased Production/profits, unemployment. • • Ch 7: Defining & Measuring Unemployment Who does it in the U.S.? – – United States Department of Labor, Bureau of Labor Statistics …is the principal Federal agency responsible for measuring labor market activity, working conditions, and price changes in the economy. Its mission is to collect, analyze, and disseminate essential economic information to support public and private decision-making. As an independent statistical agency, BLS serves its diverse user communities by providing products and services that are objective, timely, accurate, and relevant. works for pay, either for someone else or in his or her own business for 1 or more hours per week, works without pay for 15 or more hours per week in a family enterprise, or has a job but has been temporarily absent, with or without pay. An employed person is any person 16 years old or older who: 1. 2. 3. 1. 2. 3. NOTE: Persons who were waiting to be recalled to a job from which they had been laid off need not have been looking for work to be classified as unemployed. is not working, is available for work, and has made specific efforts to find work during the previous 4 weeks. An unemployed person is a person 16 years old or older who: Defining & Measuring Unemployment • • A person who is not looking for work, either because he or she does not want a job or has given up looking, is not in the labor force. Defining & Measuring Unemployment labor force = employed + unemployed population = labor force + not in labor force * *Included are persons 16 years of age and older residing in the 50 States and the District of Columbia who are not inmates of institutions (for example, penal and mental facilities, homes for the aged), and who are not on active duty in the Armed Forces. unemployed unemployment rate = employed + unemployed labor force labor force participation rate = population Defining & Measuring Unemployment • Computing the unemployment rate (July 2003): – Labor force: 141.39 million – Employed:...
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This note was uploaded on 10/01/2013 for the course ECON 1120 taught by Professor Wissink during the Spring '05 term at Cornell University (Engineering School).

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