Changes in labor force characteristics changes in labor market institutions

Changes in labor force characteristics changes in

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Changes in labor force characteristics changes in labor market institutions changes in government policies Actual Rate of unemployment= natural+cyclical Full employment at LRAS curve and natural rate of unemployment Module 14 inflation and deflation inflation rate= (price level in year 2/ price level in year 1) -1 Costs of inflation Menu costs (changing the prices) Unit -of Account (bad economic decisions because the value of the dollar is less now) Shoe-Leather (more inflation, less purchasing power, more cash on you) Nominal interest rate vs. real interest rate (real = nominal interest rate - inflation rate) Protect against inflation Banks increase nominal interest rates Workers use COLAs- Cost of Living Adjustments where contracts let the nominal interest rates account for the cost of living Individuals put money into interest-bearing accounts Misery index- inflation+unemployment
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Module 15 Price index= (cost of market basket today/cost of market basket in base year) x100 Inflation rate= (Price index in year 2- Price Index in Year 1/ Price index in year 1) x100 CPI (most used), PPI (leading indicator of inflation), GDP deflator (most accurate) Extra Equations: Growth rate= [(RGDP in year 2- year 1)/ year 1] x100
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