Essay about Inflation and Price Level

Submitted By pinkmonster
Words: 1205
Pages: 5
Open Document
End of Topic III 3/06/12 * Calculating Unemployment-Related Terms
-Total population-All persons in the United States.
-Civilian non-institutional population- All persons over the age of 16 who are not in the military or institutionalized.
-Employment- Persons actually working.
-Unemployment- persons not working but actively seeking work. * Unemployment Rate-
-The percentage of the civilian labor force that is unemployed.
-Unemployment Rate = (Unemployment/Civilian Labor Force) x100 * U.S. Labor Market Statistics, 2012(millions of persons)- total population 313.9
Civilian noninstitutional population 243.3
Civilian force labor 155.1 Employment 142.4
Unemployment 12.7 * Calculation of the Unemployment Rate, 2011
-Unemployment rate = (12.7/155.1)x100
-Unemployment rate = 8.2% * Setting an Unemployment Goal
-Is 0% unemployment a feasible unemployment rate gal?
-Macroeconomists consider some unemployment to occur “naturally” i.e.., it is presen, even when the economy is full employed. * Types of Unemployment
-Frictional Unemployment
-Structural Unemployment
-Seasonal unemployment
-Cyclical unemployment * Frictional Unemployment
-“The unemployment that arises from normal labor turnover”
-Example- You quit your job to look for a better elsewhere.
-A certain amount of frictional unemployment is assumed to occur naturally, even when the economy is fully employed. * Structural Unemployment
-“The Unemployment that arises when changes in technology or international competition change the skills needed to perform jobs or change the locations of jobs.”
-Example- A person in a manufacturing plant loses her job because of outsourcing.
- A certain amount of structural unemployment is assumed to occur naturally, even when the Seasonal Unemployment
-“The unemployment that arises because of seasonal patterns”
-Example- A high school student is unable to find a job in June, when school is not in session.
-A certain amount of seasonal unemployment is assumed to occur naturally eve when the economy is fully employed. * Cyclical Unemployment
-“The fluctuating unemployment over the business cycle that increases during a recession and decreases during an expansion”
-Cyclical unemployment is not considered to be natural.
-when cyclical unemployment is present, the economy is not considered to be fully employed. * Full Employment
-“When there is no cyclical unemployment or, equivalently, when all the unemployment is frictional, structural, or seasonal.” * Natural Unemployment rate
-“The unemployment rate when the economy is at full employment”.
-Currently assumed to be 6%.
3/18Topic IV * We will develop a macroeconomics model to help understand and make predictions about short and long-run movements in output (real GDP), the price level and unemployment * Review macroeconomics goals-
-Economic growth-measured using real GDP
-Stable prices- measured using the consumer price index
-Low unemployment- measured using the unemployment rate
-Observation-Long run- the economy tends to grow at an average annual rate of about 3% per year. Potential GDP * Aggregate demand- Aggregate Supply (AD-AS) model uses a variation of the traditional supply-demand format to explain both long and short run movements in real GDP. * Characteristics of aggregate demand- supply model. * Two of the three key macroeconomic goals (economic growth and stable prices) are reflected by the graphs axis. * The other key goal (low unemployment) can be inferred from the position of actual GDP relative to potential GDP * Explaining movements in potential GDP- forces that increase potential GDP
-Increase in labor force
-increase in capital stock
-improvements in technology * Potential GDP
-The value of real GDP when all the economy factors of production…. Are fully employed”
Show More

Related Documents: Essay about Inflation and Price Level

Macroeconomics: Inflation and Overall Price Level Essay

Macroeconomics is the sum total of economic activity, dealing with the issues of growth, inflation, and unemployment. It concerns the effects of national economic policies, an example of which is taxation rates and application, on the national economy. Macroeconomics is based on assumptions in microeconomics. Gross domestic product is an economic statistic describing the monetary value of all the finished goods and services produced within a country’s borders. Included are all of private and public…

Words 555 - Pages 3

Commerce Exam Essay

Commerce Exam – Essay Q/Define the term “Inflation” and discuss its economic effects and also outline the role of the Reserve Bank of Australia (RBA) and the Federal Govt in trying to control inflation. Inflation One of the most important economic concepts is inflation. At its most basic level, inflation is simply a rise in prices. Over time, it increases the costs of goods and services and due to that the value of a dollar goes down because you are not able to purchase as much with that dollar…

Words 843 - Pages 4

Essay on Inflation Rises

What is Inflation? Inflation is defined as a sustained increase in the general level of prices for goods and services. It is measured as an annual percentage increase. As inflation rises, every dollar you own buys a smaller percentage of a good or service. The value of a dollar does not stay constant when there is inflation. The value of a dollar is observed in terms of purchasing power, which is the real, tangible goods that money buy. When inflation goes up, there is a decline in the purchasing…

Words 1071 - Pages 5

Lecture9 Inflation Essay

Macroeconomics Lecture 09 February 5, 2013 Inflation The CPI is Used to Measure the Rate of Inflation Becomes a problem when it is high & “out of control” The annual inflation rate is the percentage change in the consumer price index (CPI) from one year to the next. CPI2010 = 218.056 CPI2011 = 224.939 The inflation rate for 2011 = ((224.939 – 218.056) / 218.056) x 100% = 3.16% Your dollar lost 3.16% The higher the rate of inflation, the more quickly the U.S. $ loses its value in…

Words 872 - Pages 4

Questions On Integrated International Macroeconomics

unemployment, and inflation in the country where you grew up. How is your own family faring? What has your government done recently to improve things? Note: These questions are intended to make sure you are informed of current events and to get you thinking. You will be graded on whether you take the questions seriously and whether you have informed yourself. 2. Levels versus growth rates Sometimes otherwise-educated people don’t recognize the distinction between the level of something and its…

Words 672 - Pages 3

List The Four Categories Of Unemployment

Bureau of Labor Statistics is used to measure changes in the level of prices of goods and services? Consumer Price Index (CPI) 3. Who would benefit from unanticipated inflation –lenders or borrowers? Why? Who would benefits from anticipated inflation –lenders, borrowers, or neither? Why? Lenders will benefit from unanticipated inflation because they can rise interest and make more money. Bowers will benefit from anticipated inflation because they had time to plan. 4. If there were 1.5…

Words 997 - Pages 4

Swot Notes Inflation Essay

SWOT notes for inflation. 1) Identify a general price rise and an individual price rise? General Price rise in general price level. Individual price rise is a price rise for a specific product eg butter 2) Identify and define inflation, disinflation and deflation? Inflation-Inflation can be defined as a general increase in the price level of a nation over a period of time. An increase in the price of a particular good or service does not mean that inflation has occurred. Inflation means the average…

Words 1050 - Pages 5

Macroeconomics: Study The Overall Or Aggregate Economy

Chapter 19 Macroeconomics Lecture Macroeconomics • studies the overall or aggregate economy • the overall price level, not individual prices • total production in the economy, not the production by individual firms • adjustments to changes across the whole economy Macroeconomics • Unemployment • Inflation •Interest Rates • Business Cycles • Exchange Rates • Economic Growth Gross Domestic Product [ GDP ] • Total output produced is the total value of all goods and…

Words 1389 - Pages 6

Major Factors Affecting The Value Of The Canadian Dollar

affect commercial interest rates (i.e. mortgages, consumer loans, deposits into financial institutions), asset prices (i.e. bonds, stocks, and houses), and exchange rates of the Canadian dollar and also the expectation of the future interest rates, economic growth and inflation. The transmission process of increasing/decreasing interest rates takes time, although commercial rates, asset prices and exchange rates are affected quite quickly. However, it takes a period of time before interest rate changes…

Words 791 - Pages 4

Essay about ECON 102 Pdf

Thursday March 19! ! Chapter 30 Inflation and Disinflation ! You will learn! - wages respond to output gaps and inflation expectations ! - how constant rate of inflation is incorporated into basic microeconomic model ! - how AD and AS shocks affect ! - what happens when BOC validates demand/supply shocks (validation process)! - three phases of inflation! - how cost of disinflation is measured by sacrifice ratio ! ! Effects of Inflation ! - failure to anticipate inflation impost costs to labour market…

Words 2090 - Pages 9