ECON 209 Lecture Notes - Lecture 19: Output Gap, Frictional Unemployment, Structural Unemployment

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Macroeconomics focus is behaviour of the overall economy. Nominal national income(current-dollar national income): total value of domestically produced. G&s annual change of quantities of products between years must adjust for in ation the quality/quantity changes. Real national income(constant-dollar national income): changes in constant dollars (not include in ation) better off/worse off: purchasing power changes. Real gdp: include the in ation, shows the short-term uctuation. Real per capita economic growth means real gdp per person increases. Average some individuals may actually worse off (distribution of income cause some worse off, countries" government social policies) Real gdp uctuates around a rising trend: the trend shows long-run economic growth the short run uctuation show the business cycle. Potential output (y*): economy could produce if all resources were employed at their normal levels of utilization (on the boundary of ppc curve) Employment: the number of adult workers who hold jobs. Unemployment: the number not employed but actively looking for a job.

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