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Macro 8
- 3. Questions?
- 5. Frictional Unemployment Time to find a new job
- 7. Structural Unemployment Too many workers Change in Demand
- 10. What kind of unemployment is caused by smartphones?
- 12. Unemployment Insurance Government program to provide income when workers become unemployed
- 13. Unemployment Insurance Unintended Consequence Moral Hazard May prolong unemployment
- 14. Minimum Wage Laws Government sets a minimum wage that can legally be paid Price Floor
- 15. $0 $5 $10 $15 $20 0 10 20 30 40 50 60 Supply Demand Wage Workers Equilibrium Wage 30 workers 30 jobs no unemployment Minimum Wage 40 workers 20 jobs 20 unemployed workers Minimum Wage 20 workers get a raise 10 workers lose job 10 new unemployed workers Minimum Wage
- 16. Labor Union Worker association that negotiates with employers over wages, benefits, and conditions
- 17. Labor Union One contract Strike Conflict between workers
- 18. Efficiency Wages Higher wages make more productive employees
- 19. Efficiency Wages Employee Wage Pizzas Productivity Wage per Pizza Bob $10 5 $2.00 Bill $20 12 $1.67
- 20. Efficiency Wages More Healthy Lower Turnover Higher Quality More Effort
- 21. Macroeconomics Lecture 8 GDP and the Price Level
- 23. Economic Cycle
- 24. AD-AS Model Aggregate Demand and Aggregate Supply
- 25. Recession A period of declining real incomes and rising unemployment defined as negative growth for two quarters (six months)
- 27. Three Key Facts Irregular and Unpredictable Variables fluctuate together Output falls - Unemployment increases
- 28. Variables GDP Financial System Interest Rates Unemployment Monetary System Trade Balance
- 29. Real - Quantities Nominal - Money
- 30. Nominal - always one dollar - fixed Real - what it will buy - varies
- 31. Can you have a nominal change but not a real change? Price level changes but output stays the same Real - Quantity Nominal - Price
- 32. ClassicalView Real qualities matter Amount of money does not matter
- 34. Long Run and Short Run Good in the short run Bad in the long run Bad in the short run Good in the long run
- 35. Lag Time between cause and effect
- 36. Price Level Quantity of Output Equilibrium price level Equilibrium output AD- AS Model Aggregate Demand Aggregate Supply
- 37. Price Level Quantity of Output Why does the demand curve slope downward?
- 38. Price Level Quantity of Output Y1 Aggregate Demand Y2 P1 P2 1. real wealth increases 2. interest rates fall 3. exchange rates depreciate increase spending increase investments increase exports
- 39. Price Level Consumption - Wealth Effect Investment - Interest-Rate Effect Net Exports - Exchange-Rate Effect
- 40. Wealth Effect Lower prices Buy more stuff Increase output Higher prices Buy less stuff Decrease output
- 41. Lower prices Need less money More money to loan Lower rates Borrow easy Buy more stuff Increase output Interest Rate Effect Higher prices Need more money Less money to loan Higher rates Borrow harder Buy less stuff Decrease output
- 42. Exchange-Rate Effect Lower prices Cause interest rates to decline Causes currency to depreciate Stimulates demand for local currency Stimulates exports Increases local output Higher prices Cause interest rates to increase Causes currency to appreciate Stimulates demand for foreign currency Stimulates imports Decreases local output
- 43. Price Level Quantity of Output Demand Shift change in consumption change in investment government purchases net exports
- 44. Aggregate Demand Curve Slopes Downward Wealth Interest Rate Exchange Rate Shifts Consumption Investment Government Net Exports
- 45. Aggregate Supply Curve Two Curves Short Run Long Run
- 46. Two Supply Curves Short Run Long Run
- 47. Short Run Adrenaline Give 110% Push to exceed normal capacity
- 48. Long Run Run out of Adrenaline Fall back to normal Cannot do 110% forever unless.....
- 49. Long Run Supply Curve New Capital Human Physical Intellectual Financial Cultural
- 50. Price Level Quantity of Output Two Supply Curves Short-Run Aggregate Supply Long-Run Aggregate Supply Price change does not affect the quantity of goods and services P
- 51. New Capital Human Physical Intellectual Financial Cultural Price Level Quantity of Output Two Supply Curves LRAS1 Y1 LRAS2 Y3 LRAS3 Y3
- 52. Exam 2