Macro 10

2. Lecture 10
Macroeconomics

3. Quiz 6: Sec__ Name__________
1. In every trade there is one_____ and two
________.
2. What are the three types of firms?
3. What are three ways to get the financial
capital to expand?

4. Valuation
Share Price: $224
Share Outstanding: 4.5 billion
Value ?
$1,008 billion or $1 trillion

5. wolframalpha.com

6. Accounting Profit
Explicit Costs
Explicit + Implicit Costs
Economic Profit

7. Finance
Time
Risk

8. Finance
Time - t or n
Risk - r or i

9. Foundation Finance
Formula
(1 + r )
n
r = risk rate
n = time periods

10. FutureValue?
Future Value = Amount Today x Factor
Factor is the Growth Formula
(1 + r )
n
r = rate
n = time periods

11. FutureValue?
(1 + r )
n
r = 10% or 0.10
n = 5 years
(1 + 0.10)5
(1.10)5
1.61

12. FutureValue?
Future Value = Amount Today x Factor
$161 = $100 x 1.61
Future Value is compounding
Future Value is multiplying

13. PresentValue?
Present Value = Future Amount ÷ Factor
Present Value = $100 ÷ 1.61
$62.11 = $100 ÷ 1.61
Present Value is discounting
Present Value is dividing

14. Finance
Unknown - Present Value or Future Value?
Must know rate and number of periods
Compute Factor with formula
(1+r)n
If FV multiply
If PV divide

15. Present Future
x Factor ?
÷ Factor ?
Factor Formula = (1 + r )
n

16. Questions
What will $100 grow to
in 10 years at 5 percent
interest?

17. Questions
What is $300 in 4 years
worth to you today?
Why?

18. Dutch Tulip Mania
1635-1637
$37,500

19. Bubbles Pop

21. Chapter 11
Unemployment

23. When workers lose their
jobs and become officially
unemployed, the labor force
participation rate:
Labor Force =
Employed + Unemployed

24. What kind of
unemployment
is caused by
smartphones?

25. Unemployment
Who measures it?
How is it measured?

26. Unemployment Rate
Labor Force
Participation Rate
Rate are Ratios

27. Who Measures?
Department of Labor
Bureau of Labor Statistics

28. Two Surveys
The Current Population Survey (CPS) "household
survey" Sample of 60,000 households.
The Current Employment Statistics Survey (CES):
"payroll survey" sample of 160,000 businesses and
government agencies that represent 400,000 individual
employees.

29. Adults 16+
Everybody 320 100%
16+ 254 80%
Under 16 66 20%

30. Adult Category
16+ 254 100%
Not in
Labor Force
94 37%
In
Labor Force
160 63%

31. Not in Labor Force
not employed
full-time student
homemaker
military
retiree
discouraged workers

32. Discouraged Worker

33. Discouraged Worker
People who would like
to work but have given
up looking for a job in
the last four weeks

34. Labor Force
Adults 16+ who have jobs
or are looking for jobs.
Employed + Unemployed

35. Labor Force
Participation Rate
The percent of the Adult
Population that is in the
Labor Force

37. 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
Year
0N
1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
Year
0
20
40
60
Shareofthecivilianlaborforce(%)
Men
Women

38. Labor Force
Total 160 100%
Employed 152.3 95.2%
Unemployed 7.7 4.8%

39. Employed
paid employees
work in own business
unpaid workers in family business
full-time and part-time
jobs but temporary absence

40. Unemployed
not employed
available
tried to find a job in the last
four weeks
waiting to be recalled from
layoff

41. Unemployment Rate
Unemployed
÷
Labor Force

42. 16+
79%
Under 16
21%
U.S Population
millions %
Under 16 66 21%
16+ 254 79%
Total 320 100%

43. Unemployed 7.7 million
3%
Employed 152.3 million
60%
Not in Labor Force 94 million
37%
Adult Population

44. Unemployed 7.7 million
5%
Employed 152.3 million
95%
Labor Force

45. millions
%
Population
%
Adults
% Labor
Force
Population 320 100%
Age under 16 66 20%
Age 16+ 254 80% 100%
Not in Labor Force 94 30% 37%
In Labor Force 160 50% 63% 100%
Employed 152.3 47.6% 60% 95.2%
Unemployed 7.7 2.4% 3% 4.8%

46. Problems
Overstate - Above actual
Cash workers
Understate - Below actual
Discouraged workers