MGTA01H3 Lecture Notes - Lecture 4: Underemployment

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Published on 15 Apr 2013
School
UTSC
Department
Management (MGT)
Course
MGTA01H3
Professor
Page:
of 3
MGTA03 Introduction to Management Week 4
Continuation from Last Week (Chapter 2)
Review
- What do you call an economic system where the government makes the choices?
Command/Planned Economy
- What do we call an economic system that can make its own choices? Market Economies
- Gross Domestic Product: Values of all goods and services produced in a country in one year
- Growing GDP
o More people, making more stuff
- Falling GDP
o Fewer people, making less stuff, also called “recession”
- The GDP for USA is growing feebly (0.8 0.9%)
- The GDP for China is growing very quickly (8-9%)
GDP Per Capita
- GDP = Total size of an economy
- “Per capita” = “Per Person”
- GDP per capita = GDP per person
- GDP per capita = a measure of relative wealth of “average citizen”
o Total GDP divided by population
- We care about GDP per capita is because when we look at the top 10 populations we would
understand why there would be such a high GDP
GDP/Capita Richest 2010
- What is it about Luxembourg that makes it substantially the richest place on earth?
o Small population
o Taxes are low
o Bankers
o Half of the bankers who work there don’t actually live there
Germany, France and etc
Productivity
- Some countries are richer than others
o Why? Productivity
- Productivity = outputs(products/services) divided by inputs (people, $$$$)
Productivity = Outputs/inputs
- High productivity (ie wealth) is produced by :
o Better educated, better trained labor
- More money Better technology
o The more money you have, the better the things you have
- More and cheaper natural resources
Productivity
- IS the economy using all of the resources at its disposal?
Unemployment
- Labour is under-used
- People want a job can’t find one!
- Unemployment defined : % of people who are actively looking for work, but can’t find any
Unemployment Canada
- Historically Canada’s unemployment rate higher than rate in USA
- Larger% of work force not working
- This is one cause to our lower wealth
- Recently (since 2008) : US rate was higher
Underemployment & Discouraged Workers Effect
- Official unemployment rate = population of people looking for work and can’t find it
- Underemployment People officially have work but it may be only a part time job or a job that
doesn’t use all their skill and education to the maximum benefit
o However much of their talent/ambition is not used
o People’s skills education and experience are not being fully utilized
- Discouraged Workers Effect
o Sent out dozens of resumes and went to 10 12 interviews and after a year they are still
unemployed
Inflation
- Prices for goods going up
- People can afford to buy less
- Hurts people on fixed incomes (pensioners)
- Suggests: shortages of things people want
“Nominal” vs “Real” GDP
- “Nominal” GDP is the value of GDP, simply as it is measured
o Ex. Value of red bicycles produced 2009
= 1 000 000 bicycles x $ 100 each
= 100 000 000
o Ex. Value of red bicycles produced 2010
= 1 000 000 bicycles x $ 120 each
= 120 000 000
- What if bicycles made in 2010 are not any faster or better?
- What if price change (from $100 to $120) is result of inflation?
o Is the economy really bigger?
No. Same number of bicycles made
“Real” GDP
- “Nominal” value is = $ 120 000 000
- “Real” volume of production is same
- “Real” value of production
o = 120 000 000/ 1.20
= $ 100 000 000
- “Real” GDP discounts inflation
Consumer Price Index
- Measure of monthly price changes
- StatsCan measures price of 600+ goods and services bought by 1000s of “average” household
Ex. Food, clothing, housing

Document Summary

Mgta03 introduction to management week 4. Gross domestic product: values of all goods and services produced in a country in one year. Growing gdp: more people, making more stuff. Falling gdp: fewer people, making less stuff, also called recession . The gdp for usa is growing feebly (0. 8 0. 9%) The gdp for china is growing very quickly (8-9%) Gdp = total size of an economy. Gdp per capita = gdp per person. Gdp per capita = a measure of relative wealth of average citizen : total gdp divided by population. We care about gdp per capita is because when we look at the top 10 populations we would understand why there would be such a high gdp. What is it about luxembourg that makes it substantially the richest place on earth: small population, taxes are low, bankers, half of the bankers who work there don"t actually live there. Productivity = outputs(products/services) divided by inputs (people, 1768317683)