macroeconomic goals n.
Download
Skip this Video
Download Presentation
MacroEconomic Goals

Loading in 2 Seconds...

play fullscreen
1 / 32

MacroEconomic Goals - PowerPoint PPT Presentation


  • 75 Views
  • Uploaded on

MacroEconomic Goals. Barnett UHS AP Econ. Uno. Full Employment That does NOT mean that everybody has a job There is always going to be some people unemployed Civilian Labor Force: People 16 or older who have looked for a job in the past 4 weeks

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'MacroEconomic Goals' - melodie-carpenter


Download Now An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
macroeconomic goals
MacroEconomic Goals

Barnett

UHS

AP Econ

slide3
Uno
  • Full Employment
    • That does NOT mean that everybodyhas a job
    • There is always going to be some people unemployed
    • Civilian Labor Force: People 16 or older who have looked for a job in the past 4 weeks
    • Goal: 5-6% unemployment rate considered the “natural rate” or “target rate”
      • Every tenth of a point = 150,000 workers
slide4
Uno
  • In order for unemployment to decrease 1 one percent, the economy must grow an extra 2 percent. (Okun’s rule of thumb).
  • Current Rate: 7.7% FED goal: 6.6%
    • Would require 1.9 million jobs created
    • Job growth averaging around 150,000 each month
    • Should take around _____ to reach goal
    • But…
slide9
Uno
  • Three types of unemployment
    • Frictional Unemployment – Temporary
      • Workers moving from one job to another
      • Students heading off into the “real world”
slide10
Uno
  • Three types of unemployment
    • Structural Unemployment - Permanent
      • When there is a mismatch between the skills of unemployed workers and the needs of the economy
      • Can retrain themselves
      • Be entrepreneurial and use their skills in novel ways
      • Can move to where their skills are in demand
        • Assembly line workers replaced by robots
slide11
Uno
  • Three types of unemployment
    • Cyclical Unemployment
      • Due to contractions (downs) from normal business cycles
      • Businesses lay off workers when the economy goes down
slide19
Dos
  • Second Goal: Stable Prices – Reasonable inflation rate
    • Inflation – Increase in the average level of prices over a given time period
    • Goal: 3% inflation rate (considered stable prices)
    • Mo’ Money, Mo’ Tomatoes
slide20
Dos
  • Second Goal: Stable Prices – Reasonable inflation rate
    • Disinflation: When the price level increases from year to year but at decreasing rate
      • Year 1 to Year 2 = 3% increase in prices
      • Year 2 to Year 3= 2% increase in prices
slide21
Dos
  • Second Goal: Stable Prices – Reasonable inflation rate
    • Deflation: Price level increase is actually negative
      • Price level drops to -1% in a year
                  • Buy 2 cars now?
slide22
Dos
  • How is inflation rate measured?
    • CPI (Consumer Price Index)
    • PPI (Producer Price Index)
    • GDP deflator = (Nominal GDP/Real GDP) x 100
  • CPI
  • Current CPI inflation rate is: 1.8 percent
  • later year - earlier year x 100
  • earlier year
slide23
Dos
  • GDP Deflator
    • Uses 2005 as base year. Set to 100 with other years reported relative to the 2005 dollar.
  • The GDP Deflator for 2010 was 110.99. On average the 2005 dollar could buy (10.99/100) 10.99% more than the 2009 dollar.
  • The GDP Deflator for 1950 was 14.65. On average the 1950 dollar could buy (100/14.65) 6.82 times as many goods as the 2005 dollar.
slide27
Tres
  • Third Goal: Economic Growth
    • Determined by growth in Real GDP
      • GDP = Gross Domestic Product
        • GDP = Market value of all final goods and services produced in an economy in a year
    • Goal: 3% annual growth
slide28
Tres
  • Third Goal: Economic Growth
      • Difference between nominal and real GDP
        • Nominal – does not include inflation
        • Real GDP - includes inflation
        • Real –
slide29
Tres
  • GDP Components
  • Components: C = consumption 70
  • I = investment 17
  • G = government expenditures 17
  • Nx = net exports -4
  • ______________________________________________________
  • 100 percent
  • The allocation will vary from year to year but must add up to 100 percent.
cuatro
Cuatro
  • Fourth Goal: Favorable Balance of Trade
  • X = exports
  • M = imports
  • X>M = trade surplus
  • X<M = The USA! (trade deficit)
  • 2008 trade deficit = $673 billion
  • Better to have strong or weak currency?
cinco
Cinco
  • Fifth Goal: Limiting Government Growth/Spending
  • Measured by looking at the rate of government spending relative to the real GDP growth
high fives for macro
High Fives for Macro!
  • 1. Full Employment
  • 2. Stable Prices
  • 3. Economic Growth
  • 4. Favorable Balance of Trade
  • 5. Limiting Government Growth