14-1, P.P ,BUSINESS CYCLES, 14-2, P.P ,UNEMPLOYMENT

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Presentation transcript:

14-1, P.P. 375-380,BUSINESS CYCLES, 14-2, P.P. 382-387,UNEMPLOYMENT MAIN IDEAS:(14-1)THE TERM BUSINESS CYCLE REFERS TO ALTERNATING INCREASES AND DECREASES IN THE LEVEL OF ECONOMIC ACTIVITY; (14-2)FUNCTIONAL, SEASONAL, CYCLICAL, AND TECHNOLOGICAL ARE THE GENERAL TYPES OF UNEMPLOYMENT

BUSINESS CYCLES IN THE U.S. RECESSION PHASES (GDP DECLINES FOR TWO QUARTERS) STARTS AT PEAK, ENDS WHEN AT A TROUGH, THEN, EXPANSION AS ECONOMY RECOVERS. DEPRESSION-A SEVERE RECESSION WITH MANY UNEMPLOYED AND FACTORIES LYING IDLE.

BUSINESS CYCLE (CON’T.) THE GREAT DEPRESSION-LASTED FROM 1929 UNTIL WWII BEGAN. PANIC CAUSED RUNS ON BANKS AND THE STOCK MARKET. CAUSES-MANY POOR AND A FEW WEALTHY (INCOME GAP), EASY CREDIT, GLOBAL TRADE FELL OFF.

CAUSES OF THE BUSINESS CYCLE CAPITALEXPENDITURES-AMOUNT OF MONEY BUSINESSES SPEND. INVENTORY ADJUSTMENTS-CHANGES IN THE LEVEL OF BUSINESS INVENTORY. INNOVATION AND IMITATION MONETARY FACTORS-CREDIT AND LOAN POLICIES OF THE FED (FEDERAL RESERVE BANK) EXTERNAL SHOCK-EXAMPLE: OIL PRICE INCREASES.

PREDICTING BUSINESS CYCLES INDEX OF LEADING INDICATORS-A MONTHLY STATISTICAL SERIES WHICH WILL USUALLY TURN DOWN BEFORE REAL GDP TURNS DOWN. ECONOMETRIC MODEL-USES ALGEBRAIC EQUATIONS.

14-2, UNEMPLOYMENT MEASURING IT-UNEMPLOYMENT RATE UNEMPLOYED-PEOPLE WHO MADE AN EFFORT WITHIN THE LAST MONTH TO FIND A JOB. LIMITATIONS OF THE UNEMPLOYMENT RATE-DOESN’T COUNT THOSE WHO HAVE QUIT LOOKING, PEOPLE CONSIDERED EMPLOYED WHEN HOLDING PART TIME JOBS.

TYPES OF UNEMPLOYMENT FRICTIONAL-BETWEEN JOBS;SHORT-TERM UNEMPLOYED STRUCTURAL-WHEN A FUNDAMENTAL CHANGE IN THE ECONOMY REDUCES THE DEMAND FOR WORKERS AND THEIR SKILLS. CYCLICAL-RELATED TO SWINGS IN THE BUSINESS CYCLE. SEASONAL-RESULTS FROM CHANGE IN WEATHER OR CHANGE IN DEMAND FOR A CERTAIN PRODUCT. TECHNOLOGICAL-AUTOMATION (WORKERS REPLACED BY MACHINES

FULL EMPLOYMENT WHEN UNEMPLOYMENT RATE GOES UNDER 4.5 PERCENT, IT IS CONSIDERED FULL EMPLOYMENT