Final exam of macroeconomics
david123367
chiang4e_ch06pt2.pptxCHAPTER 17 SLIDE 1
JIM CORWIN / ALAMY
Measuring Inflation and Unemployment
SLIDES CREATED BY ERIC CHIANG
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1
Explain how “labor force,” “employment,” and “unemployment” are defined.
Compare alternative measures of unemployment that include marginally attached workers and underemployed workers.
Describe the different forms of unemployment and which ones can be influenced by government policies.
Explain what full employment means and how the natural rate of unemployment is measured.
CHAPTER OBJECTIVES
SLIDE 2
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2
SLIDE 3
DESCRIBES PERSONS WHO ARE NOT WORKING BUT ARE ABLE AND WILLING TO WORK AND ACTIVELY SEEKING A JOB.
UNEMPLOYMENT
RODHO/SHUTTERSTOCK
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A CENTURY OF UNEMPLOYMENT
SLIDE 4
BETTMANN/CORBIS
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4
MEASURING UNEMPLOYMENT
SLIDE 5
Each month, the BLS reports:
size of the labor force.
number of people employed.
number of people unemployed.
The unemployment rate is equal to:
Number of people unemployed
Labor force
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SLIDE 6
A person is counted as employed if any of the following applies:
Works full-time or part-time
Works at a temporary job
Has a job but is on vacation, ill, on maternity leave, on strike, etc.
Is an unpaid family worker working at least 15 hours per week
MEASURING UNEMPLOYMENT
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AN UNEMPLOYED PERSON DOES NOT HAVE A JOB BUT HAS BEEN ACTIVELY (BUT UNSUCCESSFULLY) SEEKING WORK IN THE PAST FOUR WEEKS.
THE LABOR FORCE IS THE TOTAL NUMBER OF THOSE EMPLOYED AND UNEMPLOYED.
UNEMPLOYED
LABOR FORCE
SLIDE 7
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SLIDE 8
FULL-TIME STUDENTS WITHOUT A JOB ARE NEITHER EMPLOYED NOR UNEMPLOYED; THEY ARE NOT IN THE LABOR FORCE.
RANDY FARIS/CORBIS
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A FULL-TIME STUDENT WHO WORKS PART-TIME AS A PERSONAL TRAINER (EVEN JUST A FEW HOURS A WEEK) IS EMPLOYED.
SLIDE 9
ARND ROCKSER/DREAMSTIME.COM
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MONTHLY EMPLOYMENT SURVEYS
HOUSEHOLD SURVEY
A SURVEY OF AROUND 60,000 HOUSEHOLDS BY THE CENSUS BUREAU
PAYROLL SURVEY
COVERS 146,000 COMPANIES AND GOVERNMENT AGENCIES
SLIDE 10
Both surveys are needed for a complete picture of unemployment:
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10
EMPLOYMENT TRENDS
Investors and economists are interested in employment trends and how they affect the overall health of the economy.
Weekly Jobs Report
Released by the Department of Labor each Thursday
Provides an estimate of the number of persons filing for unemployment for the first time
SLIDE 11
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SLIDE 12
The labor force is constantly changing.
Population growth: overall rise in the number of available workers
Demographic changes: average age of population, birth rates, immigration
Socioeconomic reasons: more women working, delayed retirement
Economic conditions: more discouraged workers, workers going back to school
CHANGES IN THE LABOR FORCE OVER TIME
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SLIDE 13
The official U.S. unemployment rate does not account for:
underemployed workers, those working part-time or seeking a better job.
marginally attached workers, those who actively looked for work in the past 12 months but not in the past four weeks.
discouraged workers, the portion of marginally attached workers who have given up actively looking for work.
PROBLEMS WITH UNEMPLOYMENT STATISTICS
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UNEMPLOYMENT CATEGORIES
SLIDE 14
The BLS provides unemployment statistics that include underemployed and discouraged workers.
IMAGES.COM/CORBIS
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COMMON CAUSES OF UNEMPLOYMENT
Job searching and matching: It takes time to find a job and for employers to find the right employees.
Efficiency wages: Wages are kept above market equilibrium to reduce turnover and to improve productivity.
High minimum wages: If wages are too costly, hiring is likely to be reduced.
Business cycle: Recessions reduce consumer demand, leading to layoffs.
SLIDE 15
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TYPES OF UNEMPLOYMENT
Frictional unemployment results from workers who voluntarily quit to search for a better position.
Structural unemployment is caused by changes in consumer demand or technology.
Cyclical unemployment is caused by fluctuations in the business cycle (e.g., recessions).
SLIDE 16
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MUSIC STORE JOBS HAVE BECOME INCREASINGLY OBSOLETE OVER THE PAST DECADE.
SLIDE 17
ERIC CHIANG
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NATURAL RATE OF UNEMPLOYMENT
SLIDE 18
Frictional and structural unemployment always exists.
Cyclical unemployment is the focus of most public policy.
The natural rate of unemployment is equal to:
frictional unemployment + structural unemployment
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SLIDE 19
Also referred to as the nonaccelerating inflation rate of unemployment (NAIRU):
inflationary pressures are at their minimum.
actual inflation is equal to expectations.
price and wage decisions are consistent.
cyclical unemployment is zero.
NATURAL RATE OF UNEMPLOYMENT
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ACTUAL VS. NATURAL RATE OF UNEMPLOYMENT
SLIDE 20
The natural rate of unemployment has ranged from 5% to 6% for much of the past 50 years.
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KEY CONCEPTS
Inflation
Price level
Disinflation
Deflation
Consumer price index (CPI)
Producer price index (PPI)
GDP deflator
Hyperinflation
Labor force
Underemployed workers
Marginally attached workers
Discouraged workers
Frictional unemployment
Structural unemployment
Cyclical unemployment
Natural rate of unemployment
SLIDE 21
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AFTER GRADUATING FROM COLLEGE, YOU WORK 10 HOURS PER WEEK AT MCDONALD’S WHILE ACTIVELY LOOKING FOR A PERMANENT JOB. YOU ARE CLASSIFIED AS:
B
C
A
UNEMPLOYED
A DISCOURAGED WORKER
EMPLOYED
D
NOT IN THE LABOR FORCE
SLIDE 22
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Answer: C
22
AFTER GRADUATING FROM COLLEGE, YOU WORK 10 HOURS PER WEEK AT MCDONALD’S WHILE ACTIVELY LOOKING FOR A PERMANENT JOB. YOU ARE CLASSIFIED AS: (Answer)
B
C
A
UNEMPLOYED
A DISCOURAGED WORKER
EMPLOYED (Correct Answer)
D
NOT IN THE LABOR FORCE
SLIDE 23
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Answer: C
23
WHAT ARE SOME INDUSTRIES THAT HAVE FACED STRUCTURAL UNEMPLOYMENT IN THE PAST DECADE?
PRACTICE QUESTION
SLIDE 24
DANA ROTHSTEIN/DREAMSTIME.COM
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Answer: The 35mm film industry is an obvious one—both the manufacturers and photo developers. Other examples include music CD manufacturers, DVD rental stores, the postal service (stamps), and some less obvious ones, such as public libraries as more books become available online. Traditional examples include manufacturers of clothing and shoes in the United States. There are many possible answers.
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A SMALL COUNTRY HAS 1,200 CITIZENS: 800 ARE EMPLOYED, 200 ARE UNEMPLOYED, 100 ARE RETIRED, AND 100 ARE KIDS IN SCHOOL. THE UNEMPLOYMENT RATE IS:
B
C
A
16.6%
20.0%
25.0%
D
33.3%
SLIDE 25
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Answer: B
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A SMALL COUNTRY HAS 1,200 CITIZENS: 800 ARE EMPLOYED, 200 ARE UNEMPLOYED, 100 ARE RETIRED, AND 100 ARE KIDS IN SCHOOL. THE UNEMPLOYMENT RATE IS: (Answer)
B
C
A
16.6%
20.0% (Correct Answer)
25.0%
D
33.3%
SLIDE 26
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Answer: B
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END OF CHAPTER
SLIDES CREATED BY ERIC CHIANG
SLIDE 46
CHAPTER 17
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