Macro 9

2. Lecture 9
Macroeconomics

3. Quiz
Name two companies in
the DJIA.

4. Dow Jones Industrial Average
DJIA
30 leading companies

5. Finance
Time
Risk

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

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

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

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

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

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

12. 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

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

14. Chapter 11
Unemployment

15. What kind of
unemployment
is caused by
smartphones?

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

17. Unemployment Rate
Labor Force
Participation Rate
Rate are Ratios

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

19. 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.

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

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

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

23. Discouraged Worker

24. Discouraged Worker
People who would like
to work but have given
up looking for a job

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

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

28. 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

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

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

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

32. Unemployment Rate
Unemployed
÷
Labor Force

33. 16+
79%
Under 16
21%
U.S Population
millions %
Under 16 66 21%
16+ 254 79%
Total 320 100%

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

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

36. 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%

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