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Macro Concepts Aggregate Supply and Aggregate Demand GDP Unemployment

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Presentation on theme: "Macro Concepts Aggregate Supply and Aggregate Demand GDP Unemployment"— Presentation transcript:

1 Macro Concepts Aggregate Supply and Aggregate Demand GDP Unemployment
Inflation

2 GDP Total value of all final goods and services produced within a country within a given year. Real GDP- accounts for inflation. C + I + G + NX _______ _______ _______ ___________

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4 GDP C + I + G + NX Don’t Count Used Transfers Non-market
Intermediate goods

5 Business Cycle Recession- real GDP goes down for at least 6 months. R

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8 I N J E C T O S L E A K G S

9 GDP Expenditure Method- C+I+G+Nx Income Method of GDP- National Income
R+I+P+W Rent + Interest + Profits + Wages Greatest Component of each?

10 All Stats are for People 16 or Older
Population = 1000 Pop. with jobs = 600 Pop. Without jobs = 400 Pop. Actively seeking employment in past month = 190 Pop. from previous category who currently have a job = 40

11 Unemployment Unemployment Rate=
Unemployed Persons/Total Labor Force X 100 Labor Force= all civilians 16+ who are working or looking for a job Unemployed Persons= 16+ civilians who are looking for a job but do not have one

12 Agenda Unemployment Inflation Types of Unemployment
Labor Force Participation Rate Employment to Population Ratio Inflation Types Measures Movies

13 Unemployment (National)

14 Types of Unemployment Frictional- temporary while searching
Structural-lack of skills/lack of need for skills/replacement by technology/replacement by merger or streamlining Cyclical- related to health of overall economy Seasonal- seasonal Not

15 Labor Force Participation Rate
% of working age people who are Working Looking for a Job Working Age 16-64

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18 Not Unemployed If… Under 16 Have a Job Are not actively seeking a job
Are not currently available to work

19 Unemployment Formula Unemployment Rate=
Unemployed Persons/Total Labor Force X 100 Labor Force= all civilians 16+ who are working or looking for a job Unemployed Persons= 16+ civilians who are looking for a job but do not have one

20 Unemployment (National)

21 Labor Force Participation Rate

22 Labor Force Participation Rate

23 Labor Force Participation Rate

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25 Labor Force Participation Rate
% of working age people who are Working Looking for a Job Working Age 16-64

26 Employment to Population Ratio
Employment Rate Employed/*Total Population Working Age (16-64) 25-54

27 Employment to Population Ratio
16-64

28 Employment to Population Ratio
25-54

29 Unemployment Relation to Business Cycle Unemployment Rate Calculation
Types of Unemployment Labor Force Participation Rate Employment Rate (Employment to Population Ratio)

30 Frictional Structural Cyclical Seasonal Not

31 Calculate Population = 10,000 Population 16-64 = 8,000
Employed Persons = 5,000 Unemployed Persons = 350 Labor Force = ____________ Unemployment Rate = ______________ Labor Force Participation Rate = _______

32 Calculate Population = 10,000 Population 16-64 = 8,000
Employed Persons = 5,000 Unemployed Persons = 350 Labor Force = 5,350 Unemployment Rate = 6.54% Labor Force Participation Rate = 66.88%

33 Labor Force Participation Rate
% of working age people who are Working Looking for a Job % working age population in the labor force Working Age 16-64

34 Natural Rate of Unemployment
Sum of frictional and structural unemployment If Unemployment Rate – Natural Rate = 0 Full Employment- Job Finding Rate = Jon Separation Rate Natural Rate is Long Term Rate

35 Inflation

36 Demand-Pull Inflation

37 Cost-Push Inflation

38 Stagflation

39 Inflation Indexes GDP Deflator Consumer Price Index
converts a “changing basket of goods” into constant dollars. Find Real GDP Consumer Price Index Measures price change of a “fixed basket” based on price paid by consumer Cost of Living Adjustments Producer Price Index Measures price change of a “fixed basket” based on price paid consumer Supplier contracts

40 Inflation Indexes Nominal- $ amount in current year $s
Real- $ amount in constant $s Converted to base year $s Base Year = 100 Real = Nominal $/Index X 100

41 CPI (Consumer Price Index)

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45 Costs of Inflation Unit of Account Costs Menu Costs Shoe leather costs
uncertainty about spending and investment Menu Costs cost associated with changing prices Shoe leather costs Increased financial transactions Redistribution of Wealth Lenders lose and borrowers gain with unanticipated inflation and fixed rates Savings devalue

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