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Under 15 and/or Institutionalized (5.3 million) Not in labor force (9.3 million) Employed (17.3 million) Unemployed (1.4 million) Total population (4.3 million) Labor force (18.7 million) Unemployment rate = 1.4 million 18.7 million X 100 = 7.4% Unemployment rate = # of unemployed labor force X 100 LO2 1©2013 McGraw-Hill Ryerson Ltd.Chapter 7, LO2
How the unemployment rate is understated: Part-Time Employment Statistics Discouraged Workers 2©2013 McGraw-Hill Ryerson Ltd.Chapter 7, LO2
Frictional Unemployment caused by workers voluntarily changing jobs and by temporary layoffs; unemployed workers between jobs Structural Unemployment caused by Changes over time in consumer demand and in technology alter the “structure” of the total demand for labour, both occupationally and geographically Cyclical Unemployment caused by a decline in total spending (or by insufficient aggregate demand) Seasonal Unemployment caused by seasonal factors 3©2013 McGraw-Hill Ryerson Ltd.Chapter 7, LO2
Natural rate of unemployment (NRU) NOT zero unemployment Occurs when there is no cyclical unemployment Not automatic Varies over time 4©2013 McGraw-Hill Ryerson Ltd.Chapter 7, LO2
GDP Gap GDP gap = actual GDP – potential GDP Can be negative or positive Okun’s Law Every 1% of cyclical unemployment creates a 2% GDP gap 5©2013 McGraw-Hill Ryerson Ltd.Chapter 7, LO2
6©2013 McGraw-Hill Ryerson Ltd.Chapter 7, LO2
Given for 2009: Unemployment rate is 8.3% Natural rate is 6.5% Potential GDP is $1360 billion What is the GDP gap? 8.3% 6.5% = 1.8% (gap in % terms) 1.8% X 2 = 3.6% (apply Okun’s Law) 3.6% of $1360 billion = $49 billion 7©2013 McGraw-Hill Ryerson Ltd.Chapter 7, LO2
Unequal Burdens Occupation Age Gender Education 8©2013 McGraw-Hill Ryerson Ltd.Chapter 7, LO2
9©2013 McGraw-Hill Ryerson Ltd.Chapter 7, LO2
Unemployment means idleness Increases poverty, heightens racial and ethnic tensions, and reduces hope for material advancement Severe unemployment can lead to rapid and violent social and political change higher unemployment linked to increases in suicide, homicide, and physical and mental illness 10©2013 McGraw-Hill Ryerson Ltd.Chapter 7, LO2
11©2013 McGraw-Hill Ryerson Ltd.Chapter 7, LO2
12©2013 McGraw-Hill Ryerson Ltd.Chapter 7, LO2
Business Cycles, Unemployment, and Inflation 26 McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.
Business Cycles, Unemployment, and Inflation Chapter 9 Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without.
CHAPTER 7 Business Cycles, Unemployment, and Inflation 1 Slides prepared by Bruno Fullone, George Brown College © 2010 McGraw-Hill Ryerson Limited PART.
Unemployment Krugman Section 1 Module 3. Full Employment Unemployment Rate Full employment does not mean zero unemployment = to the total frictional and.
© 2005 McGraw-Hill Ryerson Ltd. Macroeconomics, Chapter 6 1 Introduction to Economic Growth, Unemployment, and Inflation.
SAYRE | MORRIS Seventh Edition Measuring the Economy: Unemployment and Inflation CHAPTER 4 4-1© 2012 McGraw-Hill Ryerson Limited.
Business Cycles, Unemployment, and Inflation Chapter 26 McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
Copyright 2008 The McGraw-Hill Companies 7-1 Economic Growth The Business Cycle Unemployment Labor Force Composition Types of Unemployment Unequal Burdens.
What is Macroeconomics? Macroeconomics is the study of the structure and performance of national economies and of the policies that governments use to.
Chapter 8 “The Business Cycle” Overview Our economy has experienced a pattern of uneven growth throughout our history. Some periods are marked by.
INTRODUCTION TO ECONOMIC GROWTH AND INSTABILITY Pertemuan 5 Matakuliah: J0594-Teori Ekonomi Tahun: 2009.
8 - 1 Copyright McGraw-Hill/Irwin, 2002 Economic Growth The Business Cycle Unemployment Inflation Redistributive Effects of Inflation Anticipated Inflation.
Ch 7.Intro to Economic Growth & Instability Why do we want economic growth??
LECTURE 8 Economic Growth and Instability. Economic Growth Economic growth is defined as either: (a) An increase in real Gross Domestic Product (GDP)
26 Introduction to Economic Growth and Instability.
Alomar_111_91 Instability: Unemployment and inflation The Twin Problems.
Types of UnemploymentandInflation The BAD BOYS OF THE ECONOMY.
Introduction to Economic Growth and Instability 8 McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.
Business Cycles, Unemployment, and Inflation 9 McGraw-Hill/IrwinCopyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.
8 - 1 Copyright McGraw-Hill/Irwin, 2005 Economic Growth The Business Cycle Unemployment Inflation CPI Redistributive Effects of Inflation Anticipated.
# McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. Business Cycles, Unemployment, and Inflation 6.
Clarifications “Full-Employment Unemployment Rate” A.K.A. “Natural Rate of Unemployment” Full-Employment is achieved when there is zero CYCLICAL unemployment.
Employment Statistics Employed You have a job (even if part time) Unemployed “Jobless, looking for jobs, and available to work” Must be ACTIVELY searching.
Copyright The McGraw-Hill Companies 19-1 Economic Growth The Business Cycle Unemployment Labor Force Composition Types of Unemployment Unequal Burdens.
Economic Growth & Instability. Defining Growth ► Increase in Real GDP ► Increase in GDP per capita – Important because GDP numbers can be deceptive based.
Introduction to Economic Growth and Instability Please listen to the audio as you work through the slides.
UNEMPLOYMENT AND INFLATION “There is a short run trade-off between reducing inflation and reducing unemployment.” -Me, on the second day of class.
Unemployment. Define Unemployment The number of people who are actively looking for work but are not currently employed.
Employment and Unemployment. Total Population age 16 and over Employed Employed Employees Self-employed Unemployed Unemployed New entrants Re-entrants.
Copyright © 2012 by McGraw-Hill Ryerson Limited. All rights reserved. Understanding Economics 6 th edition by Mark Lovewell.
Unemployment. Learning Objectives To learn that unemployment is the natural consequence of labor force dynamics. To learn the differences between the.
Unemployment 1. 9_______ 10___________ 11_________ _____ Review 1.Define GDP? What are the four components? 2.What is not included in GDP? Identify.
Unit 4—Business Cycles Review made by students.. Growth lessens the burden of A. Scarcity B. The recession C. Inflation D. The government.
Unemployment What is unemployment rate?. Unemployment Measuring Unemployment Measuring Unemployment Identifying the Employed and Unemployed Employed Employed.
Ms. Park. Christine In 2010, Canada’s total population was 25 million. Out this population, 75% were above age 15. Out of this 75%, 5% live in the.
Business Cycles, Unemployment, and Inflation Chapter 9 McGraw-Hill/Irwin Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
AP Macroeconomics Unemployment. Start with the Population of the Country (310 million) Let’s figure out which groups of people are NOT in the labor force!
Economic Costs of Unemployment GDP Gap and Okun’s Law The basic loss of unemployment is forgone output. This is a set of goods and services that.
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Slides are prepared by Dr. Amy Peng, Ryerson University Chapter Five Output, Business Cycles, and Employment Macroeconomics by Curtis, Irvine and Begg.
Economic Challenges Unemployment. Policy makers and economic analysts gauge the health of the U.S. economy by examining the labor force and unemployment:
Unit 4—Business Cycles Review made by students.. Part time employment is considered A. Fully employed B. Unemployed C. Not in the labor force
Unemployment The two major views on unemployment are: The "Keynesian" view of Unemployment: Unemployment is an excess supply of labor resulting from a.
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