MA 1 d, e, f “Macroeconomic Activity”

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Presentation transcript:

MA 1 d, e, f “Macroeconomic Activity” Winners and Losers of Unanticipated Inflation Types of Unemployment Business Cycle

Recap on what we know: Click Go to Reveal! Law of Demand states: As Price Increases, Quantity Demanded Decreases Income affect states: As Prices Increase, Income Buy Less Imagine what would happen if a significant price increase occurred throughout the nation. Who would be able to afford goods and services? When unanticipated inflation occurs, some people benefit and some lose

Winners and Losers of Unanticipated Inflation People with C.O.L.A. INCOMES (COST OF LIVING ADJUSTMENT) People with FIXED INCOMES Rich People (Would not be affected as much) Poor People (Would be affected more) Borrowers (If money borrowed does not included interest, then money paid back has lesser value than money borrowed) Lenders (If money borrowed does not included interest, then money paid back has lesser value than money borrowed) Copy This! Click Go to Reveal!

4 Types of Unemployment Type Reason/Description Cyclical Copy This! 4 Types of Unemployment Type Reason/Description Cyclical Due to an economic downturn Structural Due to a lack of skills Frictional Due to being in between jobs Seasonal Due to work schedules based upon season Click Go to Reveal!

Business Cycle Phase Copy This! The Business Cycle: is the rise and fall of economic activity. Peak – highest point Contraction- GDP is decreasing Trough- Lowest point Expansion- GDP is increasing * Each phase has characteristics which describe it.

Business Cycle Phase Characteristics This is what is happening in the economy during each of these phases Peak Contraction Trough Expansion Characteristics Point at which economy stops growing. Lowest level of unemployment Danger of recessions and depressions Rising unemployment Deflation Point at which the economic growth begins Highest level of unemployment Inflation Rising employment Copy This! Click Go to Reveal!

Let’s Review Which of the following is NOT a Winner as a result of unanticipated inflation? COLA incomes Borrowers Fixed incomes The rich Click Go to Reveal!

Let’s Review Which type of unemployment is described incorrectly? Structural-Lack of Skills Frictional-In between jobs Seasonal-Due to work schedules based on available time slots Cyclical-Due to economic downturns Click Go to Reveal!

Point “b” represents this period in the business cycle? Peak Contraction Trough Expansion a b d c Click Go to Reveal!

Let’s Review Which business cycle phase contains the WRONG CHARACTERISTIC? Peak-lowest rates of unemployment Contraction-Employment is decreasing Trough-highest rates of unemployment Expansion-Unemployment rises Click Go to Reveal!