MACROECONOMY AND ECONOMIC POLICY MEASURES OF THE MACROECONOMY CHANGES IN THE MACROECONOMY POLICIES...
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Transcript of MACROECONOMY AND ECONOMIC POLICY MEASURES OF THE MACROECONOMY CHANGES IN THE MACROECONOMY POLICIES...
MACROECONOMY AND ECONOMIC POLICY
MEASURES OF THE MACROECONOMY
CHANGES IN THE MACROECONOMY
POLICIES TO AFFECT THE MACROECONOMY
GROSS DOMESTIC PRODUCT
PROBLEM: HOW TO COMBINE ALL THE DIVERSE PRODUCTS AND SERVICES IN THE ECONOMY
SOLUTION: MEASURE THEIR ANNUAL MARKET (SALES) VALUE, AND COMBINE
RESULT IS CALLED (REAL) GROSS DOMESTIC PRODUCT, OR GDP
REAL: VALUES ARE ADJUSTED FOR INFLATION OVER TIME
PROBLEM – CAN OVER-COUNT
IF COUNT MARKET VALUE OF EVERY PRODUCT AND SERVICE, WILL “OVER-COUNT” FOR THOSE THAT ARE INPUTS INTO OTHER PRODUCTS AND SERVICES
EXAMPLE: IF COUNT LUMBER SALES, VALUE WILL ALSO BE COUNTED IN SALES VALUE OF HOMES
SOLUTION
EITHER COUNT ONLY “SALES TO FINAL USERS” – LIKE RETAIL SALES TO CONSUMERS AND SIMILAR SALES TO BUSINESSES
OR COUNT “VALUE-ADDED” AT EACH STAGE OF PRODUCTION
RESULT – US GDP IS LARGEST IN WORLD AS A SINGLE COUNTRY ($16 TRILLION)
GDP VERSUS GNP
GDP (GROSS DOMESTIC PRODUCT) – COUNTS VALUES MADE WITHIN LEGAL BORDERS OF U.S., IRREGARDLESS OF WHETHER COMPANIES ARE U.S. OR FOREIGN OWNED
GNP (GROSS NATIONAL PRODUCT) – COUNTS VALUES MADE ONLY BY U.S. COMPANIES, BUT ANYWHERE IN THE WORLD
PROBLEMS WITH GDP
ONLY INCLUDE IF MONEY CHANGES HANDS
BARTERING NOT COUNTED
LEISURE (ENJOYMENT OF DOING NOTHING) NOT COUNTED
DAMAGE DONE IN PRODUCTION (POLLUTION) NOT SUBTRACTED
USE GROWTH IN GDP TO TRACK TRENDS IN THE ECONOMY
2006,1
2006,4
2007,3
2008,2
2009,1
2009,4
2010,3
2011,2
2012,1
2012,4
-8
-6
-4
-2
0
2
4
6
%
TRACKING THE UPS AND DOWNS OF THE ECONOMIC “ROLLERCOASTER”CALLED THE “BUSINESS CYCLE”
TOP OF THE CYCLE: “PEAK”BOTTOM OF THE CYCLE: “TROUGH” GDP GROWING: EXPANSION, OR RECOVERY
GDP FALLING FOR AT LEAST 6 CONSECUTIVE MONTHS: RECESSION
GDP FALLING BY MORE THAN 10% OR LONGER THAN 3 YEARS: DEPRESSION
TRACKING UNEMPLOYMENT
COUNTING PEOPLE WHO ARE NOT WORKING FOR PAY
HOUSEHOLD SURVEY – SURVEYS AT THEIR HOMES
PAYROLL SURVEY – SURVEYS JOBS AT BUSINESSES
TO BE COUNTED AS UNEMPLOYED BY THE “HEADLINE” UNEMPLOYMENT RATE
MUST MEET THREE TESTS: 1. NOT WORKING FOR PAY 2. WANT TO WORK FOR PAY
3. “ACTIVELY” LOOKING FOR WORK
IF NOT #3, NOT COUNTED AS UNEMPLOYED – NOT COUNTED IN “HEADLINE” JOB STATISTIC! CALLED DISCOURAGED WORKERS
TRENDS IN NORTH CAROLINA’S ALTERNATIVE UNEMPLOYMENT RATES
4,09-3,10 2,10-1,11 3,10-2,11 4,10-3,11 2,11-1,12 3,11-2,12 4,11-3,12 2,12-1,13 3,12-2,13 4,12-3,138
9
10
11
12
13
14
15
16
17
18
headline U5 U6
%
TYPES OF UNEMPLOYMENT
FRICTIONAL – PEOPLE BETWEEN JOBS; NOT A WORRY
CYCLICAL - RELATED TO THE BUSINESS CYCLE – UP IN RECESSIONS; DOWN IN EXPANSIONS STRUCTURAL - OCCURS BECAUSE PEOPLE DON’T HAVE SKILLS NEEDED BY BUSINESSES – MOST DIFFICULT TYPE OF UNEMPLOYMENT
CURRENT ISSUES IN THE JOB MARKET
UNEMPLOYED WORKERS GIVING UP
JOBS BEING REPLACED BY MACHINES AND TECHNOLOGY
SKILLS MIS-MATCH
GAP BETWEEN THOSE WITH GOOD-PAYING JOBS AND JOBLESS OR LOW-PAYING JOBS