ECON 295 Lecture 15: Econ chapter 19
3 Apr 2016
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To measure total output in dollars, we add up the values of the many different goods produced. With base period prices, we get real national income. The short run fluctuations show the business cycle. Potential output is what the economy could produce if all resources were employed at their normal levels of utilization. The output gap measures the difference between potential output and actual output. When y < y*, there is a recessionary gap. When y > y*, there is an inflationary gap. Employment: the number of workers who hold jobs. Unemployment: the number who are not employed but are actively looking for one. Labour force: the total number of employed + unemployed. Unemployment rate: the number of unemployed expressed as a percentage of the labour force. Long term trend: employment has grown roughly inline with the growth in the labour force. A measure of output per unit of input.
