Macro Chap 21

• Lost incomes and production - ui benefits don't replace losses
• Lost human capital - prolonged unemployment damages future prospects, loss of experience and knowledge

Total pop over 15 not in institutions

• Sum of employed and unemployed
• Those who want to work

Number of people unemployed divide by labour force * 100

Number of involuntary part time work divide by labour force

Labour force divide by working age population

Not working, but wants a job and is available and has looked in recent past

Marginally attached worker who has stopped looking b/c of repeated failure

• Arises from normal labour turnover
• people entering/leaving workforce from creation/destruction of jobs
• PERMANENT, HEALTHY

• Arises from changes in tech/international competition
• lasts longer than frictional

Higher than normal UE at business cycle trough and lower than normal UE at business cycle peak

UE from frictions and structural change when there is no cyclical UE

UE rate equals the natural employment rate

• Age Distribution of Population - many young people has lots of job seekers, high frictional
• Scale of Structural Change - skill to perform job can lose value w/ tech upheaval
• Real Wage Rate - min and efficiency wage bring UE.
• UE Benefits - increase natural UE rate b/c lowers opp cost of job search

Set above mkt to attract workers to attract best workers

• gap b/w real and potential GDP
• as this fluctuates, UE fluctuates as well
• when + lower UE
• when - high UE

average level of prices

Persistently rising price level

Persistently falling price level

• Redistributes income - workers hired on salary, but w/o compensation for inflation
• Redistributes wealth - borrower/lender affected 
• Lowers real GDP and Employment - inflation raises profits, boom in production and employment. Real GDP rises above potential. This is temporary.
• Diverts resources from production to research on inflation

Inflation at its worst. Rate of 50% per month

Measure of average prices paid by urban consumers for a fixed basket of consumer g/s

• contains g/s each weighted by relative importance (ex bus ride vs house)
• average household

statscan checks prices on goods in basket monthly and aims to measure changes in price, not qty bought or qty increase in package

• Find cost of cpi at base period prices
• Find cost of cpi at current period prices
• Calculate cpi for current and base period

cost of cpi basket current divide cost of cpi basket at base

cpi this year - cpi last year divide by cpi last year

• New goods - compare computer with typewriter
• Quality change - items get better every year, this improvement is part of price increase
• Commodity Substitution - people buy whats cheaper, cpi ignores substitution 
• Outlet Substitution - higher prices = more walmart use

• index prices of all items included in GDP
• = Nominal gdp divide by real gdp *100

• index of prices of all items included in consumption expenditure of gdp
• = nominal consumption expend. divide by real consump. expend. *100

Inflation rate that excludes volatile elements