This document covers several topics related to macroeconomics and finance including: 1. It discusses the finance formula (1 + r)n which is used to calculate future and present value based on the interest rate and number of periods. 2. It provides examples of calculating future and present value using the finance formula. 3. It briefly discusses the three types of unemployment: frictional, seasonal, and structural unemployment. 4. It ends with sample calculations for unemployment rates based on numbers of employed and unemployed individuals.

2. Lecture 9
Macroeconomics

3. Opening
Prayer

4. Quiz Master

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

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

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

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

11. PresentValue?
Present Value = Future Amount ÷ Factor
Present Value = $500 ÷ 1.61
$310.56 = $500 ÷ 1.61
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. Three Types of
Unemployment
Frictional
Seasonal
Structural

16. Frictional
Unemployment
Time to find a new
job

17. Seasonal
Unemployment
Demand changes
with the season

18. Structural
Unemployment
Too many workers
Change in Demand

21. What kind of
unemployment
is caused by
smartphones?

25. 99% Reduction in Energy
449 watts to 5 watts

26. Unemployment Rate
Labor Force
Participation Rate
Rate are Ratios

27. Total
Population
Adults 16+
In the Labor Force
Adults 16+ Under 16
In the Labor Force Not in the Labor Force
Employed Unemployed

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

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

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

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. Who Measures?
Department of Labor
Bureau of Labor Statistics

35. 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.

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

37. Labor Force Participation Rate
Labor Force Participation Rate (LFPR) = 900 ÷ 1300
Labor Force Participation Rate (LFPR) = .692 or 69.2%
Adults 16+ In the Labor Force
900
Not in the Labor Force
400
Labor Force Participation Rate (LFPR) = In the Labor Force ÷ Adults

38. Unemployment Rate
In the Labor Force Employed
850
Unemployed
50
Unemployment Rate = 50 ÷ 900
Unemployment Rate = .056 or 5.6%
Unemployment Rate = Unemployed ÷ Labor Force
Labor Force = Employed + Unemployed

39. 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?

40. Population 3,000
Under 16 250
Adults 2,750
Not in the Labor Force 450
In the Labor Force 2,300 83.6%
Labor Force Participation Rate
Labor Force ÷ Adults
Employed 2,070
Unemployed 230 10.0%
Unemployment Rate
Unemployed ÷ Labor Force

41. 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%

42. 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

43. 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

44. 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%

45. 110,400 people are employed. The
unemployment rate is 8 percent.
1. How many are in the Labor Force?
2. How many are Unemployed?

46. 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