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Econ Test 3--summer 2012 (aced the test and got 96%)

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ECON 2030
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Test 3Economic GrowthoDefinition at a point in time we are producing more stuff than we were in a previous point in time in the past stuff goods and services Creating more income so we have more ability to buy goods and servicesoMeasure calculatechange and real Gross Domestic Product measure of production of goods and servicesoMajor IssueFluctuations over timeLong Run in calendar timedecadescenturiesChanges in Productivityoutput per worker per hour A worker today in the US can produce more in one hour than a worker 150 years ago could produce in a hour This can generate a lot more income than before and higher living status Healthy growth rate 253 growth rate If we do not achieve this we are not growing fast enoughShort Run month to month quarter to quarterBusiness Cycleshort run fluctuations in economic growth Sometimes it is lower sometimes its lower Recession downside of the business Depression not part of the business cycle a name we give to a recession that is long and severe Expansion upside of the business cyclenot bad unless if it stays like thatExampleProductivity procyclicalwhere we are in the business cycle affects other things like productivity Procyclical when the economy is on the upside expansion productivity increases and vice versa Unemployment The BasicsoDefinitionsUnemployment Rate right now it is 82 are we getting better or getting worse and how quicklyThe number of people unemployed in the US unemployedlabor force x 100Labor Force Participation Rate LFPR labor force working age populationNumber of people who participate or anticipate to work in the labor forceoMeasurement BLS Household surveyReflects the entire civilian noninstitutional population Population under age 16 active duty military institutionalized individuals working age populationEmployed paid employess during weel worked in their own business profession or farm worked without pay at least 15 hours in a family business or farm temporarily absent from their jobs bc of illness travel etc OR Unemployed if you said no to all of the above are you unemployed ANDneed to meet all criteriaAvailable for work at that timeMade specific efforts to find employment during 4week period No jobException ppl that are laid off and are expecting recall do not have to be actively looking to be unemployed Unemployedunemployedlabor force x 100oDoesnt measure the true problemNot in Labor Force when you do not say yes to all unemployed criteria Stay at home parentsRetirees Labor Forceab employedunemployedWorking age populationabc employedunemployednot in labor forceoExamplesoTrue problem of unemploymentThe ability of the economy to grow and our living standards are affectedThere are people who have given up lookingThere are people who are working part time jobs that want full time they cant find oneoRelationship with the business cycleCountercyclical with a lagoUnemployment Four TypesoFrictional Definition deals with individual people and businessesIn the real world it takes time to collect information The job hunter and the store both do not have all the information to match them up very quickly One job one job hunter and the skills matchShortterm desirableDesirable for the individuals involved and for businesses to look around for the best individuals For the economy
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