Macro 9

2. Lecture 8
Macroeconomics

3. Opening
Prayer

4. Quiz Master

5. Valuation
Share Price: $17
5
Share Outstanding: 16.5 billio
n
Value
?
$2.85 trillion

6. wolframalpha.com

7. Accounting Pro
fi
t
Explicit Costs
Explicit + Implicit Costs
Economic Pro
fi
t

8. Finance
Tim
e
Risk

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

10. Foundation Finance
Formula
(1 + r )
n
r = risk rat
e
n = time periods

11. number of periods
Value r = 5%
r = 10%
r = 15%
Value = (1 + r)n r = rate
n = number of periods

12. number of periods
Value
r = 15%
Value = (1 + r)n r = rate
n = number of periods
Future
Value
Present
Value

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

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

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

16. PresentValue?
Present Value = Future Amount ÷ Factor
Present Value = $500 ÷ 1.61
$310.56 = $500 ÷ 1.61
Present Value is discounting
Present Value is dividing

17. 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

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

19. Chapter 1
1
Unemployment

20. Three Types o
f
Unemployment
Frictiona
l
Seasona
l
Structura
l

21. Frictiona
l
Unemployment
Time to find a new
job

22. Seasona
l
Unemployment
Demand changes
with the season

23. Structura
l
Unemployment
Too many worker
s
Change in Demand

26. What kind of
unemployment
is caused by
smartphones?

30. 99% Reduction in Energy
449 watts to 5 watts

31. Unemployment Rat
e
Labor Force
Participation Rat
e
Rate are Ratios

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

33. Employed
paid employee
s
work in own busines
s
unpaid workers in family busines
s
full-time and part-tim
e
jobs but temporary absence

34. Unemployed
not employe
d
availabl
e
tried to find a job in the last four week
s
waiting to be recalled from layoff

35. Not in Labor Force
not employe
d
full-time studen
t
homemake
r
militar
y
retire
e
discouraged worker
s

36. Discouraged Worker

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

38. Who Measures?
Department of Labo
r
Bureau of Labor Statistics

39. 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.

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

41. Population 330
Adults 254
Labor Force 160
Employed 152
Under 16 76
Not in Labor Force 94
8 Unemployed
Employed 152 8
Unemployed
Not in Labor Force 94 Under 16 76
Labor Force
Participation Rate
=
Labor Force
÷
Adults
Unemployment Rate =
Unemployed
÷
Labor Force
Rates

42. 3,000 people live in Pooleynesia. There are
250 people under 16. 450 people are not
in the labor force. 230 people are
unemployed.
1. What is the Labor Force Participation
Rate?
2. What is the Unemployment Rate?