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ECO349H5 (18)
Lecture 5

# ECO349H5 Lecture 5: 5th class

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Department
Economics
Course
ECO349H5
Professor
Michael H O
Semester
Spring

Description
Unemployment Unemployment:U Employment: E 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 Questions: 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) Unemployment types 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, different 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 计业越来越多运用到电脑，一些不会电脑的员工被淘汰 Question Part 1： 1. 食品加工厂购进了大量设备，因此辞退了一些工人→ 2. 一个食品加工厂的工人想跳槽，于是辞职以后在寻找工作机会→ 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→ Full employment 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 ? GDPcalculation 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. Question 1: 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 +
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