After reading this chapter, you should be able to: Describe the business cycle and its primary phases, illustrate how unemployment and inflation are measured, explain the types of unemployment and inflation and their various economic impacts.
Trang 1Inflation 09
McGrawHill/Irwin Copyright © 2012 by The McGrawHill Companies, Inc. All rights reserved.
Trang 2in economic activity over time
Trang 3Time
Peak
Peak
Peak
Reces sion
Rece ssio
n
Ex pa
ns io
on
Trough
Trough Grow th
Trend
Trang 4decreases in output and employment
Trang 5Under 16 and/or Institutionalized (71.4 million)
Not in labor force (81.7 million)
Employed (139.9 million)
Unemployed (14.3 million)
Total
population
(307.3
million)
Labor force (154.2 million)
Unemployment rate =
14,265,000 154,142,000
X 100 = 9.3%
Unemployment rate =
# of unemployed labor force
X 100
Trang 6counted as if full-time
counted as unemployed
Trang 7waiting to take jobs soon
structure of the demand for labor
the business cycle
Trang 8unemployment
or fall below the NRU
Trang 9GDP
creates a 2% GDP gap
Trang 10Economic Cost of Unemployment Economic Cost of Unemployment
Trang 11Unequal Burdens
Trang 12mental illness
change
Trang 13Global Perspective
Trang 14power” of money
CPI
Price of the Most Recent Market Basket in the Particular Year
Price estimate of the Market
Basket in 1982-1984
CPI 207.3 - 201.6
201.6
Trang 15money
Trang 16inflation
Percentage change in real income =
Percentage change in nominal income
Percentage change in price level
Trang 17deteriorates
dollars”
Trang 18dollars”
Trang 19real income
best
best