Transcript Unit two ap econx

AGENDA, 9.18.12
1) Check Modules 11/12
2) Update on quizzes/projects/article reviews
3) Quantity Control (finish!)
4) Circular Flow Diagram
5) GDP
6) Real GDP
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7) HW: Module 13/14
WELCOME TO
MACROECONOMICS!!!
National income & product accounts = how we measure a country’s
wealth (MEP – measurement of economic performance)
(“national accounts”) – consumer spending, sales of producers,
business investments, government purchases, etc
Circular Flow Diagram –
Households
Firms
Product Markets
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Factor Markets
3
Advanced CFD:
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Adds in Government,
Financial Institutions,
International Transactions
CIRCULAR FLOW
DIAGRAM
•
Flow of money into each market or sector is equal to the
flower of money coming out of that market or sector
•
Households engage in consumer spending
•
Households earn income by wages from labor, stocks,
bonds, income from interest/rent
•
People do not spend all of their disposable income – put
some into savings
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The big things:
GOVERNMENT ROLE?
Government gets taxes
Government gives “govt transfers” – what are these?
Government buys goods/services (govt purchases)
Foreign Lending
** Imports and exports
may be gov’t OR
individual but
counted for national
accounts!
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International Trade – imports and exports
AGENDA, 9.20.12
1) Check Modules 13/14
2) GDP (what is it? Calculating)
3) Real GDP
4) Practice Question
5) Unemployment
6) Hand out tests, project grades
7) HW: Module 15/Summary
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Remember: Quiz over Modules 8-15 next Wednesday!
GROSS DOMESTIC
PRODUCT
GDP = total value of goods and services produced in an
economy in a given time period
We compare economies using GDP
*final goods versus intermediate goods
KNOW THIS!!
Formula for calculating GDP
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GDP = C+I+G+X-IM
GDP
DOES INCLUDE
DOES NOT INCLUDE
-final
goods/services
- Intermediate
goods/services
-investment
spending
- Inputs
- Changes to
inventories
- Stocks/bonds
- Used goods
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- Foreign
produced
goods/services
REAL GDP
What is the problem with “regular” GDP?
Real GDP versus nominal GDP =
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Aggregate Output =
REAL GDP
GDP per capita
Why is it important?
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How do we measure?
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PRACTICE:
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Atoll K is small island nation. Its population total is 400, and it
has 100 wage earners who earn an average of $50 per
year. Each wage earner spends $40 per year buying local
goods and services and $2.50 buying imports. The island
exports a total of $800 worth of goods. The Government tax
rate is 10% and all government money is spent on building
infrastrcuture and supporting schools. There is only one
industry (uranium mining) on the island and it employs every
wage earner. The industry spends $600 each year on new
mining equipment. What is the GDP?
ANSWER
Y = C + I + E + G,
where E = X – M
C = 100 x $40 = $4000 Total Consumer Spending
I = 600 Total spent on Investment
X = 800 Total received from Exports
M = 100 x $2.5 = -250 Total spent on Imports
G = .1 x (100 x $50) = 500 (10% of total income for workers)
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$5650 Total = GDP
AGENDA, 9.24.12
1) Check Module 15
2) Finish Unit Two (unemployment) *no Modules 14/15 on
Quiz 2
3) Quiz overview
4) Review content (practice problems)
5) Pass out project rubrics, rest of quizzes
Notes:
*Quiz Wednesday 9/26
*Y Block 9/26 – optional session to go over quiz
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*Y Block 10/2 – optional extra quiz to show mastery
UNEMPLOYMENT RATE
Employed – Congrats, you have a job!
Unemployed – jobless, looking for jobs, available for work
(actively seeking in past 4 weeks)
-
Happily retired
-
Disabled
-
In school
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Not unemployed, not employed:
UNEMPLOYMENT RATE
Know it!! Love it!!
Labor Force = sum of Employed and Unemployed
Labor Force Participation Rate =
(labor force/total pop. 16 and over) X 100
Unemployment Rate =
(# of unemployed workers/labor force) X 100
How measured? = Current population survey - monthly
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(Sample Size 60,000)
UNEMPLOYMENT RATE
• “Good” = about 4%, people get worried when it rises
above about 8%
• Never will reach 0%
• Can understate unemployment
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• “discouraged workers”
• “Marginally attached workers”
• “underemployed workers”
= Bureau of Labor Statistics calculates the broader
measure of labor underutilization
* U6 = unemployed rate + three above
UNEMPLOYMENT
Job changes:
- new technologies emerge
- consumers’ tastes change
- structural changes
- poor management/bad performance
Frictional Unemployment = unemply. Due to time workers
spend in the job search
- job creation/destruction
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- workers entering/re-entering workforce
STRUCTURAL
UNEMPLOYMENT
When # of workers exceeds # of jobs at a certain pay level
Employment and the Labor Market – supply and demand
Causes of S.U.:
Minimum Wages
Labor Unions
Efficiency Wages
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Public Policy
UNEMPLOYMENT
Natural Rate of Unemployment = frictional + structural
Actual Rate of Unemployment = natural + cyclical
Natural Unemployment changes because…
- labor force changes
- labor market institutions
Cyclical is
unemployment
that results from
the business
cycle
Additional type of unemployment isn’t one of “Big Three”
(frictional, structural, cyclical) but also important: seasonal,
resulting from jobs that naturally end/begin with a season/event
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- changes in govt. policies
QUIZ REVIEW
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Price Controls (Ceilings, Floors)
-
Quantity Supplied, Quantity Demanded (at certain
prices)
- Effects of ceilings, floors (shortage, surplus)
- Inefficiencies/Problems
Quantity Controls (Quotas)
-
- Price Supplied versus Price Demanded
- “Wedge”
- Problems/Inefficiencies
Circular Flow Diagram (what is it? Parts? Purpose?)
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QUIZ REVIEW
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GDP (what goes in it, calculating it)
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Real GDP (difference between it and nominal, how do we
calculate, what does it show?)
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Unemployment
How to calculate
Kinds of unemployment
Supply/demand of wages showing shortage/surplus
of workers
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