Labor force: LF
Population: P Population
U + E = LF E + UE = LF
LF + Non-LF = P
(non-LF: under age 14 or disabled)
Unemployment rate = UN/LF
Participation rate = LF/P
1. Population isA, unemployment is B, labor force is C, unemployment rate is ?
2. Population isA, employment is B, labor force is C, unemployment rate is ?
3. Unemployment rate is a%, population is B, labor force is C, unemployment is ?
4. Participation rate is a%, population is B, employment is C, unemployment is?
5. Employment isA, unemployment is B, unemployment rate is ?
6. Population is A, labor force is B, employment is C, unemployment is D, people not
in the labor force is ? (two ways)
1. Frictional: 自己不想干, 例如辞职以后在找工作的人
2. Cyclical：real output different from potential output. 关键词是 output/production,
3. Structural: 某一领域的科技发展或者市场变化，个人无法胜任此工作。例如会
Question Part 1：
3. 食品行业最近状况不好，production 大量减少，于是辞退了部分员工→
The employment when economy achieve potential output. Or all available labor
resources are being used in the most economically efficient way.
We can also say even in the full employment, some unemployment exists because of
the frictional unemployment and/or structural unemployment.
CPI and GDP
GDP calculation：∑Pi * Qi
Real GDP calculation: ∑P(base yr)*Qi 价格用 base year
CPI in 2014：∑Pi*Q(base year)/∑P(base year)*Q(base year)
GDP deflator = (nominal GDP/real GDP)*100
1 Q of apple P of apple Q of milk P of milk
Base year 100 1 200 2
2014 300 4 400 3
GDP in base year
GDP in 2014
Real GDP in 2014
CPI in 2014
Money GDP or GDP = deflator * real GDP
GDP Deflator Real GDP
2013 105 760,000
2014 855,000 800,000
1. GDP in 2013?
2. Deflator in 2014?
3. Growth rate of GDP
4. Growth rate of real GDP
Rate of inflation: (CPI-CPIbase)/CPIbase
Real interest rate = interest rate - inflation
Unexpected inflation affects unaware private sectors:
1. CPI increases fromAto B, the rate of inflation is ?
2. CPI increases fromAto B, then B to C, the average inflation is ?
3. If CPI of last year is 100, CPI this year is 105, then cost of basket of good this year
is __ higher/lower than last year
4. The interest rate is 5%, inflation is 0.5%, real interest rate is ?
1. Value added
If add up all final goods → double count problem → overestimate
What is intermediate goods? Final product of companyAis input of company B
Only consider revenue-cost of inputs, not consider salaries.
A food processing company’s revenue in 2014 is 5000, cost of sugar is 100, cost of
potatoes is 500, cost of administrators’wage is 1000, the value added is ?
2. Total expenditure approach
Expenditure approach = C + I +