UNIT 5-

  Phillip's curve

a.    Short run

·         Represents the relationship between employment and inflation

·         Trade off between inflation and unemployment that only occurs in the short run

·         There is an inverse relationship between unemployment and inflation

·         Has relevance to Okun's law.

·         Since wages are sticky, inflation changes, move the points on the SRPC

·         If inflation persists and the expected rate of inflation rises, then the entire SRPC moves upward due to stagflation

·         If inflation expectations drop, due to new technology or economic growth, then the SRPC moves downward

b.    Long run

·         Long run Phillips curve occurs at the natural rate of unemployment 

·         Represented by a vertical line

·         No trade off between unemployment and inflation in the long run, which means that the economy produces at the full employment level

·         Will only shift if the LRAS curve shifts

·         Structural, seasonal, and frictional unemployment

·         Full employment is around 4-5%

·         Major LRAC assumption is that more worker benefit create higher natural rates. Fewer worker benefits create lower natural rates.

·         Whatever shifts PPC, will shift LRAS

Unit 4

1)      Money is any asset to purchase goods or services

2)      3 uses of money

a)      Medium of exchange

b)      Unit of account

·         How do you compare prices

c)       Store of value

3)      3 types of money

a)      Commodity money

 (1)    Salt

(2)    Olive Oil

(3)    Gold

b)      Representative money

 (1)    IOU

c)       Fiat Money

·         Money because the government says so

(1)    Paper currency and coins

4)      6 characteristics of money

a)      Durability

·         How long it will last

b)      Portability

·         Travel

1)       Divisibility

·         Divided out

2)      Uniformity

3)      Limited supply

4)       Acceptability

·         Take it anywhere

5)      Money supply

6)      Total value of financial assets available in the US economy

7)        M1 money

(1)    Liquid assets

(2)    Easily converted to cash

(3)      Cash

(4)    Paper currency

(5)   Coins

(6)  Checkable deposits or Demand Deposits (check or checking accounts)

(7)    Travelers check

8)       M2 money

(1)    M1 Money + Savings account and money market account

(a)    It isn’t sent immediately

·         Financial institution

a)      Store money

b)      Save money

c)       Loan money

·         Credit card

·         Mortgages

7)      4 ways to save money

a)      Savings account

b)      Checking accounts

c)       Money market accounts

d)      Certificate of deposit (CD)

8)      Loans

 

https://youtu.be/Cj2rS9naLUY

1. How does the Bureau of Labor Statistics calculate the rate of inflation from one year to the next?  The unemployment rate is the number of unemployed divided by the labor force. An increase in the unemployment rate does not necessarily mean a decline in the labor force; a higher unemployment rate can occur if the number of people entering the labor force as unemployed is larger than the number of people entering the labor force as employed. 

2.What effect does inflation have on the purchasing power of a dollar? Inflation and purchasing power are inversely proportional, as prices increase with inflation, purchasing power of your dollar decreases. You get less for your money with inflation.

3. Explain the Rule of 70.  estimate the number of years for a variable to double, take the number 70 and divide it by the growth rate of the variable.

4. Okun’s law predicts that when the actual unemployment rate exceeds the natural rate of unemployment by two percentage points, the GDP gap will equal 1%______ of the potential GDP.

Unemployment & Inflation – 2/9/15 to 2/15/15

1. What was the unemployment rate for December 2014? It was 5.6%
2. How does that rate compare with November 2014? There was an increase of 5.8 %
3.  What were the unemployment rates for adult women, teenagers, blacks, Hispanics, and whites? unemployment rate for teenagers (18.8 percent) increased in January. The unemployment rates for adult men (5.3 percent), adult women (5.1 percent), whites (4.9 percent), blacks (10.3 percent), Asians (4.0 percent), and Hispanics (6.7 percent). 

tonycortez96@gmail.com


Unit 2- GDP


1.  A. Changes to inventories

2. B. Imports

3. N/A

4. A.  Year1-$1,400      Year 2-$2,700