SS 141 Lecture Notes - Lecture 5: Unemployment, Blue-Collar Worker, Business Cycle
Document Summary
Business cycle: alternaing increases and decreases in economic acivity over ime: boom= increase or demand, bust= decrease in economic acivity. Phases of the business cycle: peak (2005, recession: pull back (dec. 2007, trough: unemployment & inlaion (2009, expansion (2012) Business cycle luctuaions: economic shocks, prices are sicky downwards, economic response entails decreases in output and employment. Causes of shocks: irregular innovaion, producivity changes, monetary factors. Greece going back to drakmas could have helped the country: poliical events. Military coup: military takes over gov. (castro takes over. Fricional unemployment: individuals searching for jobs or waiing to take jobs soon: ie: college, trade or high school graduates. Structural unemployment: occurs due to changes in the structure of the demand for labor: decline in the demand for blue collar (mechanics) Cyclical unemployment: caused by the recession phase of the business cycle. Economic cost of unemployment: gdp gap, okun"s law. Every 1% of cyclical unemployment creates a 2% gdp gap.
