Macro Inflation and Unemployment
Click here to load reader
-
date post
19-Oct-2014 -
Category
Technology
-
view
3.573 -
download
1
description
Transcript of Macro Inflation and Unemployment
![Page 1: Macro Inflation and Unemployment](https://reader038.fdocuments.in/reader038/viewer/2022100500/5444cdb7b1af9f740a8b4ab2/html5/thumbnails/1.jpg)
Macroeconomics
The study of behavior and decision-making of entire economies
![Page 2: Macro Inflation and Unemployment](https://reader038.fdocuments.in/reader038/viewer/2022100500/5444cdb7b1af9f740a8b4ab2/html5/thumbnails/2.jpg)
Macroeconomic QuestionsWhy does output fluctuate?
What determines economic growth?
Why do we have unemployment?
Why do we have inflation?
Which governmental policy affects output, growth, unemployment, and inflation?
How do changes in the amount of money in the economy affect output, growth, unemployment and inflation?
How do domestic economic activities affect other countries and our trade? And vice-versa, no?
![Page 3: Macro Inflation and Unemployment](https://reader038.fdocuments.in/reader038/viewer/2022100500/5444cdb7b1af9f740a8b4ab2/html5/thumbnails/3.jpg)
GDP• value of all final goods produced
consumption + investment + Gov’t. purchases + exports – import spending = GDP
• better measure of production than GNP (NET exports)
![Page 4: Macro Inflation and Unemployment](https://reader038.fdocuments.in/reader038/viewer/2022100500/5444cdb7b1af9f740a8b4ab2/html5/thumbnails/4.jpg)
Macroeconomic QuestionsWhy does output fluctuate?
What determines economic growth?
Why do we have unemployment?
Why do we have inflation?
Which governmental policy affects output, growth, unemployment, and inflation?
How do changes in the amount of money in the economy affect output, growth, unemployment and inflation?
How do domestic economic activities affect other countries and our trade? And vice-versa, no?
![Page 5: Macro Inflation and Unemployment](https://reader038.fdocuments.in/reader038/viewer/2022100500/5444cdb7b1af9f740a8b4ab2/html5/thumbnails/5.jpg)
How to measure if the econ. growing?
• Durable goods
![Page 6: Macro Inflation and Unemployment](https://reader038.fdocuments.in/reader038/viewer/2022100500/5444cdb7b1af9f740a8b4ab2/html5/thumbnails/6.jpg)
How to measure if the econ. growing?
• Durable goods• CPI
![Page 7: Macro Inflation and Unemployment](https://reader038.fdocuments.in/reader038/viewer/2022100500/5444cdb7b1af9f740a8b4ab2/html5/thumbnails/7.jpg)
How to measure if the econ. growing?
• Durable goods• CPI - market basket
![Page 8: Macro Inflation and Unemployment](https://reader038.fdocuments.in/reader038/viewer/2022100500/5444cdb7b1af9f740a8b4ab2/html5/thumbnails/8.jpg)
How to measure if the econ. growing?• Durable goods• CPI (market basket)
O%
-1
-2
+1
+.25
O%
+.50
-.25
Consumer Price Index All Goods
CPI
LESS Food and EnergyJan ‘99 Oct ‘09
![Page 9: Macro Inflation and Unemployment](https://reader038.fdocuments.in/reader038/viewer/2022100500/5444cdb7b1af9f740a8b4ab2/html5/thumbnails/9.jpg)
How to measure if the econ. growing?
• Durable goods• CPI • inflation diff. in CPI divided by base CPI
(we’ll calculate it shortly)
![Page 10: Macro Inflation and Unemployment](https://reader038.fdocuments.in/reader038/viewer/2022100500/5444cdb7b1af9f740a8b4ab2/html5/thumbnails/10.jpg)
How to measure if the econ. growing?
• Durable goods• CPI • inflation diff. in CPI divided by base CPI
(we’ll calculate it shortly)
• unemployment
![Page 11: Macro Inflation and Unemployment](https://reader038.fdocuments.in/reader038/viewer/2022100500/5444cdb7b1af9f740a8b4ab2/html5/thumbnails/11.jpg)
Macroeconomic QuestionsWhy does output fluctuate?
What determines economic growth?
Why do we have unemployment?
Why do we have inflation?
Which governmental policy affects output, growth, unemployment, and inflation?
How do changes in the amount of money in the economy affect output, growth, unemployment and inflation?
How do domestic economic activities affect other countries and our trade? And vice-versa, no?
![Page 12: Macro Inflation and Unemployment](https://reader038.fdocuments.in/reader038/viewer/2022100500/5444cdb7b1af9f740a8b4ab2/html5/thumbnails/12.jpg)
Macroeconomic Goals
•Full Employment
•Price Stability
•Economic Growth
![Page 13: Macro Inflation and Unemployment](https://reader038.fdocuments.in/reader038/viewer/2022100500/5444cdb7b1af9f740a8b4ab2/html5/thumbnails/13.jpg)
Inflation and Unemployment!!
Two Things that’ll Make You Sad ‘ ,_,__
![Page 14: Macro Inflation and Unemployment](https://reader038.fdocuments.in/reader038/viewer/2022100500/5444cdb7b1af9f740a8b4ab2/html5/thumbnails/14.jpg)
Why do we have inflation?Two Theories on Inflation
• cost-push - increase wages, raise prices, pay high prices, demand higher wage, etc. (PRODUCERS)
• demand-pull - too much demand (CONSUMERS)
Workers’ wages ↑
Company ↑ prices to pay for ↑ wages
Consumers pay ↑ prices
Workers (consumers) demand ↑ wages b/c prices
going up
![Page 15: Macro Inflation and Unemployment](https://reader038.fdocuments.in/reader038/viewer/2022100500/5444cdb7b1af9f740a8b4ab2/html5/thumbnails/15.jpg)
Inflation
• Purchasing power• Real income effect
![Page 16: Macro Inflation and Unemployment](https://reader038.fdocuments.in/reader038/viewer/2022100500/5444cdb7b1af9f740a8b4ab2/html5/thumbnails/16.jpg)
Calculating Inflation
• CPI recent yr.– CPI earlier yr. X 100 = Inflation
CPI earlier yr.
(% change in price)
EX = 2004 Honda Accord $20,000 2005 Honda Accord $21,5007.5% increase in price
![Page 17: Macro Inflation and Unemployment](https://reader038.fdocuments.in/reader038/viewer/2022100500/5444cdb7b1af9f740a8b4ab2/html5/thumbnails/17.jpg)
Another Macroeconomic Measure: Unemployment
Jan ‘99
4
66
88
10%
Oct. ‘09Jan ‘06Jan ‘03
U.S. Unemployment Rate 1999-2009
![Page 18: Macro Inflation and Unemployment](https://reader038.fdocuments.in/reader038/viewer/2022100500/5444cdb7b1af9f740a8b4ab2/html5/thumbnails/18.jpg)
Definitions of Employed, Unemployedand Unemployment Rate
•Employed = everyone currently working
•Unemployed = people looking or temp. laid off from work
•Labor force = employed + unemployed
•Unemployment Rate = unemployed labor force
![Page 19: Macro Inflation and Unemployment](https://reader038.fdocuments.in/reader038/viewer/2022100500/5444cdb7b1af9f740a8b4ab2/html5/thumbnails/19.jpg)
Why do we have unemployment?Types of Unemployment
• seasonal • cyclical• structural • frictional
![Page 20: Macro Inflation and Unemployment](https://reader038.fdocuments.in/reader038/viewer/2022100500/5444cdb7b1af9f740a8b4ab2/html5/thumbnails/20.jpg)
Fini!