CAS EC 102 Lecture Notes - Lecture 2: Market Clearing, Inverse Relation, Automatic Stabilizer

• School: Boston University
• Department: Economics
• Course: CAS EC 102
• Professor: Jay Zagorsky

Document Summary

Food prices surge as drought exacts a high toll. Number of people unemployed in most countries is usually not very large. In usa, china and india combined, only 60 million/3. 5 billion people are unemployed. Unemployment is important because when rate is high, there is often political unrest and gov"t overturn. When unemployment is high, hiring is easy, vice versa. During times of unemployment, businesses hire talent to ensure they are ready for the next economic expansion. Inverse relationship between the unemployment rate and business sales. When unemployment is high, people cut back on spending. Discouraged workers: people who would like to work but have given up looking foe job. Does not count in unemployment statistics (about 6 million people) Encouraged workers: people who when the economy heats up, suddenly start looking for a job. Added workers: people who enter the labor force when the primary earners loses their job.