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Lecture 13 unemployment

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Lecture 13 unemployment

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Lecture 13 unemployment

  1. 1. Macroeconomics Lecture 13 Unemployment
  2. 2. Questions
  3. 3. Quiz
  4. 4. 1.Are you included in the labor force? 2. If 300 people are unemployed and the unemployment rate is 6%, how many people are employed? 3.What is the labor force participation rate in the U.S.? 4. If I am unemployed and become a discouraged worker, what happens to the unemployment rate? 5. Over the past 70 years has the labor force participation rate increased for decreased for men? Quiz 4 Name__________ No 5,000 63% Goes down Decreased
  5. 5. Natural Rate of Unemployment The normal rate of unemployment around which the unemployment rate fluctuates
  6. 6. Cyclical Unemployment The deviation of unemployment from its natural rate
  7. 7. Unemployment Frictional Seasonal Structural
  8. 8. Frictional Time to find a new job
  9. 9. Seasonal Demand changes with the season
  10. 10. Structural Too many workers Change in demand for skills
  11. 11. What kind of unemployment is caused by smartphones?
  12. 12. Structural Creative Destruction 10% aYear
  13. 13. Structural Learn a new skill
  14. 14. Unemployment Insurance Government program to provide income when workers become unemployed
  15. 15. Unemployment Insurance Unintended Consequence Moral Hazard May prolong unemployment
  16. 16. Why are wages too high? Minimum wage laws Unions Efficiency Wages
  17. 17. Minimum Wage Laws Government sets a minimum wage that can legally be paid
  18. 18. $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
  19. 19. Unemployment Insurance a government program that pays people when they become unemployed
  20. 20. Union Worker association that negotiates with employers over wages, benefits, and conditions
  21. 21. Union One contract for all employees Strike Conflicts between workers
  22. 22. Efficiency Wages Higher wages make more productive employees
  23. 23. Efficiency Wages Employee Wage Pizzas Productivity Wage per Pizza Bob $10 5 $2.00 Bill $20 12 $1.67
  24. 24. Efficiency Wages More Healthy Lower Turnover Higher Quality More Effort
  25. 25. The Monetary System
  26. 26. Key Terms money medium of exchange unit of account store of value liquidity commodity money fiat money currency demand deposits central bank money supply monetary policy reserves fractional-reserve banking reserve ratio money multiplier bank capital leverage leverage ratio capital requirement open-market operations discount rate reserve requirements
  27. 27. Two Choices Make or Trade
  28. 28. Barter Direct trade - stuff for stuff No money Double coincidence of wants
  29. 29. Both sides have to want what the other side has Double coincidence of wants
  30. 30. Both must want what the other has at the same time Double coincidence of wants
  31. 31. Money makes trade easier
  32. 32. What is money?
  33. 33. Money Something people use to trade with
  34. 34. Why would you accept a cigarette if you didn’t smoke?
  35. 35. Functions of Money Medium of exchange Unit of account Store of value

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