文档介绍：Intermediate Macroeconomics
Lecture 4
Topics
4 questions from before
HW #1
Unemployment
** Natural rate of unemployment
2 reasons for unemployment
Frictional unemployment
Wait unemployment
Patterns of unemployment
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Inventories
Year
Prod.
Sold
Price
2000
10
8
100
2001
0
0
200
2002
0
1
300
2003
0
0 broken
400
Year
C
I (investment is not stock, but flow)
GDP
2000
800
200
1000
2001
0
0
0
2002
300
-300
0
2003
0
Inventories –400;Depreciation +400
0
Real . Nominal
Profit = p * Y – w * L – r * K
Y = MPL * L + MPK * K
W ( r ):return to L (K) in terms of money (nominal)
MPL (MPK):return to L (K) in terms of products (real)
Increase e tax rate
What are the effects on the loanable funds market?
t↑T↑Y – T↓private savings↓
However,
T↑T – G↑public savings↑
Therefore, the final result will be…
Depends…
Quantity Demanded . Demand
r ↑or↓affects __I____
r1
r2
I2
I1
A
B
I( r )
Quantity Demanded . Demand
___I ( r )___↑or↓affects
S, I
r
S
I( r )
E
E’
r*
r*’
I (r )’
Natural Rate of Unemployment
Definitions
Misery index: the sum of inflation and unemployment rates
Natural rate of unemployment: the average rate of unemployment around which the economy fluctuates
Natural Rate of Unemployment
In eq’m, natural rate of unemployment is a constant
f * U=s * E
f: the rate of job finding
s: the rate of job separation
U: unemployed
E: employed