Econ 100 Week 1

Economy in the News

-- Consumer spending
-- Retail sales rise

Chapter 1:

Defining Economics
 - economics examines how people / nations make choices in a world of scarcity
 - something is scarce if choosing an alternative requires giving up another
 - opportunity cost: what you give up to get something

Economic Way of Thinking
 1. We emphasize opportunity costs when we analyze choices.
 2. We generally assume that individuals pursue self-interest in making choices.
 3. Choices are made "at the margin" (margin = extra)

What is Macroeconomics
 - study of the economy as a whole
      - total production of business firms (GDP_
      - total consumption (spending) of all households
      - unemployment, inflation

Chapter 3: (Three main topics : Unemployment, Inflation, GDP)

I. Unemployment
 - definition: the unemployment rate is the % of the labor force that is unemployed
 - labor force (LF): those persons who are employed (E) plus those who are unemployed (U)
    LF = E + U ; includes only the non-institutionalized civilian adult population
 - unemployed: people who are willing and able to work who are actively seeking employment but who do not have a job
 - doesn't count as unemployed: not children, not people in jail, do have to account for retired people but not actively seeking work, volunteers, outliers
 - unemployment rate
     = U / LF
     = U / (U+E)
 - discouraged workers: give up looking for a job, not included in U; during a recession this # and % rate goes up
 - labor force participation rate
    = LF / "adult...population"
    typically around 2/3 , 67%
 - Bureau of Labor Statistics (BLS) www.bls.gov
      July 2012 :
            E = 142, 220, 000
            U = 12, 794, 000
            LF = 155, 013, 000
            civ. adult pop. = 243, 354, 000
U / LF   =    12.8 mil / 155 mil = 8.3% unemployment rate
LF / adult pop. = 155 mil / 243 = 63.7%
       July Unemployment Rates:
           Teen: 23.8 %
            25+ : 6.9%
                      of the 25+ :   highschool ed. only: 8.7%
                                           some college: 7.1 %
                                           bachelor's degree: 4.1%

Alternative Measures of Labor Utilization
 Table A - 15
U-4 = measures total unemployment plus discouraged workers
U + discouraged workers / LF = 9.7%
U-6 = most comprehensive measure, includes discouraged workers and includes people working PT who want to work FT = 15%