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ECON 201 Lecture Notes - Lecture 8: Aggregate Demand, Aggregate Supply

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School
Northwestern University
Department
Economics
Course
ECON 201
Professor
David Berger

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Document Summary

Labor force participation rate: labor force/ adult population x 100. Bureau labor statistics (bsl): measure unemployment with household survey. Employed: paid employees, unpaid family members business, full time and part time workers and people on leave. Not in labor force: not working and not looking for work (homemakers, students, retirees) During recessions firms lay off workers and unemployment rate increases and labor force participation rate decreases because it is hard to find a job so people get discouraged and leave labor force. Natural rate of unemployment: optimal rate of unemployment, aggregate supply equals aggregate demand; prices aren"t rising too much. When interest rates are low stock prices are high- gov. will try to keep low interest rates if unemployment rate is above natural rate in order to keep people working. Establishment survey- survey 100 some plants and it gives number of how many people they have working for them.

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Related Questions

Suppose that the Bureau of Labor Statistics reports that the entire adult population of Mankiwland can be categorized as follows: 25 million people employed, 3 million people unemployed, 1 million discouraged workers, and 1 million people who are either students, homemakers, retirees, or other people not seeking employment. What is the labor-force participation rate?

Q#1. Homemakers are not included in the employment or labor force totals compiled by the Bureau of Labor Statistics household survey. They are included in the working-age population totals. Suppose that homemakers were counted as employed and included in the labor force statistics. How would that change affect the following: (a) labor force; (b) labor force participation rate; (c) unemployment rate, and (d) the employment-population ratio? (answer has to be 560 charceters or less)

#Q2: What advice would you give to someone who is frictionally unemployed? What advice would give someone who is structurally unemployed? What advice would you give someone who is cyclically unemployed? (Answer has to be 560 characeters or less)

1. For April 2015, the Bureau of Labor Statistics (BLS) estimates that the number of employed workers in the US was 148,523,000. The total number of workers who were not employed but were actively seeking work or waiting to be recalled from the layoff was 8,549,000. The total number of workers who were not employed and were neither looking for work nor waiting to be recalled from the layoff was 93,194,000.

a. Calculate the number of workers in the labor force and the adult working population.

b. Calculate the labor force participation rate and the unemployment rate.

c. Figure 2.1 in the lecture slides gives the same data, but for April 2013. Calculate the percentage change in the number of unemployed workers, the percentage change in the number of workers in the labor force, and the percentage change in the adult working population between April 2013 and April 2015.

d. Has the labor market improved between April 2013 and April 2015? Has it clearly improved, or is there a chance that it has not actually improved? Justify your answer. (Hint: Compare the labor force participation rate and the unemployment rate for April 2013 and April 2015).