This document contains lecture materials on macroeconomics and unemployment rates including: - Examples of calculating unemployment rates based on numbers of employed and unemployed people. - Factors that can cause unemployment rates to be overstated or understated such as discouraged workers. - Types of unemployment including cyclical, structural, and frictional unemployment. - Government programs and policies related to unemployment such as unemployment insurance and minimum wage laws. - Concepts like the natural rate of unemployment, efficiency wages, and unintended consequences of policies.

2. Lecture 10
Macroeconomics

3. Opening
Prayer

4. Quiz Master

6. 3x

7. Quiz
There are 160,000 adults in your city. 110,400 people are employed.
The unemployment rate is 8 percent.
1. How many are in the Labor Force?
2. How many are Unemployed?
3.What is the Labor Force Participation Rate?
4. If you are going to receive $1,000 when you graduate in three years
and your risk rate is 8 percent, what it the present value?

8. 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?

9. Calculating Unemployment Rates
Employed
+ Unemployed
= Labor Force
# %
100%
The unemployment rate is 10% and there
are 4,500 people employed. What is the
number unemployed?
10%
90%
4,500
5,000
500
4,500 ÷ .90 = 5,000

10. Calculating Unemployment Rates
Employed
+ Unemployed
= Labor Force
# %
100%
The unemployment rate is 5% and there are
2,500 people unemployed. What is the
number employed?
5%
95%
47,500
50,000
2,500
2,500 ÷ .05 = 50,000

11. Calculating Unemployment Rates
Employed
+ Unemployed
= Labor Force
# %
100%
The unemployment rate is 3% and there are 19,400
people employed. There are 30,000 adults. What is
labor force participation rate?
3%
97%
19,400
20,000
600
19,400 ÷ .97 = 20,000
20,000 ÷ 30,000 = .67 or 67%

13. 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
Y a
0
N
1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
Y a
0
20
40
60
S
a
a
a
(%)
Ho er o er char o
Adj s ear range
da a displa .
N : I
a
a a
. Ba
16 a a
T a a
a a a a
a C
S .
S : 1948-2015 a
a a , C P
S , U.S. B a
S a
G a W
Men
Women

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

15. Frédéric Bastiat
(1801-1850)
There is only one difference between a
bad economist and a good one: the bad
economist confines himself to the
visible effect; the good economist takes
into account both the effect than can
be seen and those effects than must be
foreseen.
What is Seen andWhat in Not Seen,
1850

16. Natural Rate of
Unemployment
The normal rate of
unemployment around
which the unemployment
rate fluctuates

17. Cyclical
Unemployment
The deviation of
unemployment from its
natural rate

18. Structural
Unemployment
Creative
Destruction
10% a year

19. Unemployment
Insurance
Government program to
provide income when
workers become
unemployed

20. Unemployment
Insurance
Unintended Consequence
Moral Hazard
May prolong unemployment

21. Minimum Wage Laws
Government sets a
minimum wage that can
legally be paid
Price Floor

22. $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

23. Labor Union
Worker association that
negotiates with
employers over wages,
benefits, and conditions

24. Efficiency Wages
Employee Wage Pizzas Productivity
Wage per Pizza
Bob $10 5 $2.00
Bill $20 12 $1.67

25. Efficiency Wages
More Healthy
Lower Turnover
Higher Quality
More Effort