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Table of Contents
Table of Contents....................................................................................................................1
All Multipliers and index ratios:and Marginal propensty's to Consume................................1
Chapter 1:.........................................................................................................................1
Chapter 18:.......................................................................................................................1
Chapter 19:.......................................................................................................................1
All Formulas:........................................................................................................................2
Chapter 1:.........................................................................................................................2
Chapter 18:.......................................................................................................................2
Chapter 19:.......................................................................................................................2
IMPORTANT NOTES from LAST SEMESTER..........................................................................5
CHAPTER 10 ...........................................................................................................................7
: UNEMPLOYMENT:..................................................................................................................7
Unemployment:......................................................................................................................8
The Employment Pool:.........................................................................................................8
Measuring Unemployment...................................................................................................8
The Costs of Unemployment:...............................................................................................8
Types of Unemployment:.....................................................................................................9
Policies to Reduce Unemployment......................................................................................9
Unemployment in the Keynesian & AD-AS Models............................................................10
CHAPTER 11 .........................................................................................................................12
: Economic Growth:...............................................................................................................12
Introduction:.........................................................................................................................12
Definition and Measurement of Economic Growth................................................................13
Some problems associated with GDP as measure of economic growth:........................13
Calculating Economic Growth:........................................................................................13
The Business cycle:........................................................................................................14
Sources of Economic Growth:...............................................................................................14
Supply Factors:...............................................................................................................14
Demand Factors:............................................................................................................15
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All Multipliers and index ratios:and Marginal propensty's to
Consume
Chapter 1:
Chapter 18:
1) #@#=1/1-c : Multiplier for Keynesian macroeconomic model without foreign sector or
Government
Chapter 19:
1) The old marginal propensity to consume is c with taxes included.The slope of this
curve is c(1-t) which is allways smaller than c.
2) The new marginal propensity to consume is c(1-t) with taxes included.The slope of
this curve is c(1-t) which is allways smaller than c.
3) The Multiplier without Taxes= #@#= 1/1-c
4) Multiplier with Taxes = #@#=1/1-c(1-t)
All Formulas:
Chapter 1:
Chapter 18:
1)
Chapter 19:
GOVERNMENT SPENDING
1) Equilibrium position of Tot.Income-Production/Tot.Spending-Demand
: Y0=Abar
:Income equilibrium =Tot. Autonomous Spending
2) Consumption Function: c=C/Y :
3) Equilibrium Income=Y0
4) To calc: EQUILIBRIUM level we start with
5) Equilibrium condition : Y=A(where eqilibrium is)
6) so :Y=C+I+G because (A=C+Ibar+Gbar)
7) and C=Cbar +cY)
8) So: Y=(Cbar+cY)+I+G
TAX
1) Tax Rate: T=tY
2) Specific exercise:If the Gov. wishes to close the gap between full employment (=Yf as
an example) and lower levels by incresing spending –they must work pout how much
with above formula.=^Y=@^G :so:^G=^Y/@. where multiplier will increase %income
morethan %spending
Exports&Imports
1) The Formula for Imports/Exports is: A = C+I+G+(X –Z).
ECS102-8 economics Part2 Yr1 Page 2
Page 3 of 16
ECS102-8
CHAPTER 10
: UNEMPLOYMENT:
Unemployment:
• Unemployment & Inflation are referred to as the twin evils of Macro-economics.
• RSA : 20/30% 94' - 30/40% 2002' -25% 2007 unemployment of Labour force /
Economicly active/able Participants.:high & rising unemployment is most serious of
RSA social troubles.
The Employment Pool:
1. Stock Concept-Level or Rate of Unemployment is a stock.
2. Flows -People Entering & Leaving the unemployment pool.
3. 4 reasons to enter unemployment pool:
a. New entrant still looking for
b. leave specially to look for another job-but still searching
c. laid off(retrenched till demand picks up)
d. firm closes-no hope of re-employment.
4. 3 reasons to exit unemployment pool
a. hired
b. recalled from a lay-off
c. get discouraged and stop looking for work.
Measuring Unemployment.
1. Very difficlt to measure unemployment because of:seasonal/housewives/those not
seeking work but able/criminals/hawkers-self-employed etc. ....so different. estimates
done can easy differ alot.
2. term Rate of Unemployment=The % of the EAP –Economically Active Population –
(those Willing & Able to work or the Workforce/or Labour force)NOT working.
3. Various ways of Obtaining Data on Unemployment.
a. Official Census Data : bad side –1-Once per 5 years -2-Lag before publication
of data.
b. Unemployment Register :bad side :only very few register-ie those collecting
UIF.
c. Subtract (1) subsistence agriculture (2) informal sector(hawkers) (3) In
d. Formally employed FROM: EAP(econ. activ. popul.).
e. Statistics S.A. estimate-bad- controversy between strict or expanded
definition usage.Went from strict 'pre-94 –to expanded '94 etc.,TODAY publish
both of!
4. term Strict Definition of Unemployment : (1)over 15 (2) available 7 days prior
interview for Self-employment OR Paid employment. (3) took steps to find /search 4
weeks prior interview for S or P work.
5. term Expanded Definition of Unemployment: OMITS (3) above-ie:only WANT
work–not look
i. Frictional unemployment
ii. seasonal unemployment
iii. new entrants: to market may be too many -be more than the rate of incr.
in Prod.
iv. Skills- if workers Not have needed skills may still unemploy even in
economic growth.
v. Struct. – lack of skills TYPE cannot be overcome by just incr. production
vi. Capital goods/Technology type increase in production increase emplmnt.
For GRAPH BELOW:Yf= production/income at FULL EMPLOYMENT
Nf= employment at FULL EMPLOYMENT
the curve of the production function shows the law of diminishing returns:
the rate . of increasing returns from more people employed will
slowly decrease as more are . ... employed.
ECS102-8
CHAPTER 11
: Economic Growth:
Introduction:
Economic development is a separate subdiscipline in economics apart from economic
growth. ,whereas for years it was seen as the same thing by economists.