PRODUCTION, INCOME, AND EMPLOYMENT ECONOMICS SECOND EDITION ROBERT E. HALL STANFORD UNIVERSITY MARC LIEBERMAN NEW YORK UNIVERSITY CHAPTER 18 PRODUCTION, INCOME, AND EMPLOYMENT

Figure 1 Stages of Production $1.00 (Wood Chips) $1.50 (Raw Paper) $2.25 (Notebook Paper) $3.50 $5.00 Lumber Mill Paper Office Supplies Manufacturer Wholesaler Retailer ECONOMICS 2e / HALL & LIEBERMAN CHAPTER 18 / PRODUCTION, INCOME, AND EMPLOYMENT © 2001 South-Western

Table 1 GDP in 1999: The Expenditure Approach (Billions of Dollars) ECONOMICS 2e / HALL & LIEBERMAN CHAPTER 18 / PRODUCTION, INCOME, AND EMPLOYMENT © 2001 South-Western

Table 2 Value Added at Different Stages of Production ECONOMICS 2e / HALL & LIEBERMAN CHAPTER 18 / PRODUCTION, INCOME, AND EMPLOYMENT © 2001 South-Western

Figure 2 Real GDP Growth Rate, 1960–1999 –3 –2 –1 1 2 3 4 5 6 7 8 Year 1960 1965 1970 1975 1980 1985 GDP growth needed for constant unemployment rate output per capita 1990 1999 1995 Growth Rate (Percent Change from Previous Period) ECONOMICS 2e / HALL & LIEBERMAN CHAPTER 18 / PRODUCTION, INCOME, AND EMPLOYMENT © 2001 South-Western

Figure 3 U.S. Quarterly Unemployment Rate, 1960–1999 1965 1970 1975 1980 1985 1990 1999 1995 Unemployment Rate (Percent) Year 1 2 3 4 5 6 7 8 9 10 11 ECONOMICS 2e / HALL & LIEBERMAN CHAPTER 18 / PRODUCTION, INCOME, AND EMPLOYMENT © 2001 South-Western

Figure 4 Actual and Potential Real GDP, 1960–1999 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 1960 1965 1970 1975 1980 1985 1990 1995 1999 Year Actual and Potential Real GDP (Billions of 1996 Dollars) ECONOMICS 2e / HALL & LIEBERMAN CHAPTER 18 / PRODUCTION, INCOME, AND EMPLOYMENT © 2001 South-Western

Table 3 Unemployment Rates for Various Groups, January 2000 ECONOMICS 2e / HALL & LIEBERMAN CHAPTER 18 / PRODUCTION, INCOME, AND EMPLOYMENT © 2001 South-Western

Figure 5 How BLS Measures Employment Status Employed Worked one or more hours for pay? Unemployed Temporary layoff? Searched for work? Yes Not in Labor Force No ECONOMICS 2e / HALL & LIEBERMAN CHAPTER 18 / PRODUCTION, INCOME, AND EMPLOYMENT © 2001 South-Western

Figure 6 Employment Status of the U.S. Population— January, 2000 ECONOMICS 2e / HALL & LIEBERMAN CHAPTER 18 / PRODUCTION, INCOME, AND EMPLOYMENT © 2001 South-Western

Figure 7 The Trade-Off Between Real GDP and Leisure C Maximum Other Possible Choices Output ECONOMICS 2e / HALL & LIEBERMAN CHAPTER 18 / PRODUCTION, INCOME, AND EMPLOYMENT © 2001 South-Western