UNIT #6:
MACROECONOMICS
Mr. Lindquist – Economics
STUDENTS CAN:
• Identify the stages of the Business Cycle
• Explain the 3 Macroeconomic Problems
• Identify the FOUR Types of Unemployment
• Apply knowledge of unemployment to explain different types in various real-life scenarios
MACRO vs MICRO
• Microeconomics:
• deals with behaviors and decision making by small units of
the economy: individuals and firms
• Small Parts of the economy
• Macroeconomics:
• part of economics that deals with the economy as a whole
and uses aggregate (total) measures of output, income,
prices, and employment.
• BIG PICTURE of the Economy
Macroeconomics
How does this affect you????
• READING THE ECONOMY!
• Predicting Recessions and Expansions
• Timing Loans
• Timing Investments
• Examining Economic Indicators
• GDP, Unemployment, Inflation, Consumer Confidence,
Business Cycles, Durable Goods, etc.
3 Macroeconomic Goals
1. To create stable, economic growth. (GDP)
2. To have full employment and low
unemployment. (Unemployment/mobilizing
resources)
3. To have stable prices. (inflation/deflation)
ESSENTIAL QUESTION
• What can a nation’s GDP, unemployment, and inflation-rate
tell us about the composition of its economy and the health
of its economy?
PRACTICAL QUESTION:
• Will you be able to read the economy to make educated
decisions that will save you thousands of dollars???
Business Cycle
Unemployment
Mr. Lindquist
Economics
Unemployment Definition
• Unemployment includes people who are actively looking for
work.
• MUST BE WILLING & ABLE TO WORK!
• People who have stopped looking are not counted as unemployed.
LABOR FORCE: People looking for work over the age of 16yrs old.
ISSUES WITH UNEMPLOYMENT MEASUREMENTS
• Measured by the number of people who file for unemployment.
• It can be misleading!!!
Measurements do not include:
1. Discouraged Workers:
• people who were looking for work but gave up
because they didn’t succeed in finding a job.
• The unemployment rate underestimates, by the number
of discouraged workers, the number of people who would
like to work
Measurements do not include:
2. Underemployed Workers
• people who are working part time but would like to
work full time, or who hold a job that requires a lower
skill level than they possess.
• These people are considered employed, but they could be
more productive in a different job.
Measurements do not include:
3. Distribution of Unemployment
• different groups within the economy experience vastly
different rates of unemployment. The groups may be age
cohorts, or race or ethnic categories.
• Knowing the distribution of unemployment by a particular
characteristic is important in constructing policies to help the
unemployed
Types of Unemployment
1. Cyclical: people who are not working because firms do not
need their labor due to a lack of demand or a downturn in the
business cycle.
•
•
Contraction/trough in the Business Cycle
Sometimes called “RECESSIONAL UNEMPLOYMENT”
• For example, if people are not buying many goods and services,
workers are laid off.
Types of Unemployment
2. Structural: mismatches between job seekers and job
openings.
75% of people in Michigan have NO Bachelors degree Available
jobs in Michigan, but require the right education.
• INCREASE HUMAN CAPITAL!!!!
• For example: unemployed people who lack skills or do not have
sufficient education are structurally unemployed.
Types of Unemployment:
3. Frictional:
• They may have quit one job to find another, or they
could be trying to find the best opportunity after
graduating from high school or college.
• VOLUNTARY CHANGE IN CAREER
How can we fix it?
• Which of these do you think the government can
influence? (Star the two the gov’t can affect)
• What are some ways in which the government could
help to decrease these types of unemployment?
Unemployment Happens
Full Employment:
• happens with the economy is at the natural rate of
unemployment.
• Usually about 4% Unemployment rate (now about 6%)
• Natural Rate of Unemployment:
• level of unemployment when there is no cyclical
unemployment (can still have the next 2 types of
unemployment)
WHAT TYPE OF UNEMPLOYMENT ARE EACH
OF THE FOLLOWING FACING:
• Rob, a journalist, leaves his job in New Your to look for a new job in San
Francisco.
•
Frictional
• Frank, a factory worker get’s laid off and replaced by new technology.
The Factory posts a new position as mechanical technician but Frank
lacks these skills.
•
Structural
• Sarah was hired at JC Penney’s in late November, but lost her job in
January.
•
Seasonal
• Lisa lost her job at GM because during the recession their products were
not selling.
•
Cyclical