ECN 203 Lecture Notes - Lecture 9: Uric Acid, Deflation, Peanut Butter
Document Summary
Looks at the causes of: slowing production in the economy, rising unemployment. Recession: actual gdp falls for two consecutive quarters or more. Depression: prolonged, deep decline in gdp (great depression) Not necessarily individual well being: u rate= # unemployed/ # labor force, what is excluded in the u-rate, consequences of rising unemployment, labor force= employed + unemployed. Natural rate of unemployment-- sum of the frictional and structural rates. If estimated as 4% and and actual u rate is 6%, the 2% difference is due to demand deficient unemployment. If economy is at full employment, the unemployment rate equals the natural rate (can"t be 0%) Nominal value-- a value measured in current dollars. Consumer price index (cpi)-- measure price changes of good the typical household buys- measure of inflation. 6 articles of clothing, 2 pairs of shoes, yearly cost of bus passes, and yearly cost of rent, and 1 ipad.
