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Long-Run and Short-Run Concerns: Growth, Productivity, Unemployment, and Inflation
Long-Run and Short-Run Concerns: Growth, Productivity, Unemployment, and Inflation
20
Long-Run and Short-Run
Concerns: Growth,
Productivity, Unemployment,
and Inflation
Prepared by:
© 2007 Prentice Hall Business Publishing Principles of Economics 8e by Case and Fair
Long-Run and Short-Run
Concerns: Growth, Productivity,
Unemployment, and Inflation 20
Chapter Outline
Long-Run Output and Productivity
Growth
Inflation
Defining Inflation
Price Indexes
The Costs of Inflation
Inflation: Public Enemy Number One?
Looking Ahead
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LONG-RUN AND SHORT-RUN CONCERNS: GROWTH,
PRODUCTIVITY, UNEMPLOYMENT, AND INFLATION
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LONG-RUN OUTPUT AND PRODUCTIVITY
GROWTH
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LONG-RUN OUTPUT AND PRODUCTIVITY
GROWTH
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RECESSIONS, DEPRESSIONS, AND
UNEMPLOYMENT
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RECESSIONS, DEPRESSIONS, AND
UNEMPLOYMENT
TABLE 7.1 Real GDP and Unemployment Rates, 1929–1933 and 1980–1982
THE EARLY PART OF THE GREAT DEPRESSION, 1929–1933
YEAR PERCENTAGE CHANGE UNEMPLOYMENT NUMBER OF UNEMPLOYED
IN REAL GDP RATE (MILLIONS)
1929 3.2 1.5
1930 −8.6 8.9 4.3
1931 −6.4 16.3 8.0
1932 −13.0 24.1 12.1
1933 −1.4 25.2 12.8
Note: Percentage fall in real GDP between 1929 and 1933 was 26.6 percent.
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RECESSIONS, DEPRESSIONS, AND
UNEMPLOYMENT
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RECESSIONS, DEPRESSIONS, AND
UNEMPLOYMENT
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RECESSIONS, DEPRESSIONS, AND
UNEMPLOYMENT
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RECESSIONS, DEPRESSIONS, AND
UNEMPLOYMENT
unemployed
unemployment rate =
employed + unemployed
unemployed
employed + unemployed
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RECESSIONS, DEPRESSIONS, AND
UNEMPLOYMENT
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RECESSIONS, DEPRESSIONS, AND
UNEMPLOYMENT
COMPONENTS OF THE UNEMPLOYMENT RATE
Unemployment Rates for Different
Demographic Groups
TABLE 7.3 Unemployment Rates by Demographic Group, 1982 and 2005
NOVEMBER JULY
YEARS 1982 2005
Total 10.8 5.2
White 9.6 4.4
Men 20+ 9.0 3.4
Women 20+ 8.1 4.3
Both sexes 16–19 21.8 13.4
African-American 20.2 10.2
Men 20+ 19.3 8.3
Women 20+ 16.5 8.9
Both sexes 16–19 51.1 36.4
Source: U.S. Department of Labor, Bureau of Labor Statistics. Data are not seasonally adjusted.
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RECESSIONS, DEPRESSIONS, AND
UNEMPLOYMENT
Unemployment Rates in States and Regions
TABLE 7.4 Regional Differences in Unemployment, 1975, 1982, 1991, and
2003
1975 1982 1991 2003
U.S. avg. 8.5 9.7 6.7 6.0
Cal. 9.9 9.9 7.5 6.7
Fla. 10.7 8.2 7.3 5.1
Ill. 7.1 11.3 7.1 6.7
Mass. 11.2 7.9 9.0 5.8
Mich. 12.5 15.5 9.2 7.3
N.J. 10.2 9.0 6.6 5.9
N.Y. 9.5 8.6 7.2 6.3
N.C. 8.6 9.0 5.8 6.5
Ohio 9.1 12.5 6.4 6.1
Tex. 5.6 6.9 6.6 6.8
Sources: Statistical Abstract of the United States, various editions.
The national unemployment rate does not tell the whole story. A low national rate of
unemployment does not mean that the entire nation is growing and producing at the
same rate.
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RECESSIONS, DEPRESSIONS, AND
UNEMPLOYMENT
Discouraged-Worker Effects
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RECESSIONS, DEPRESSIONS, AND
UNEMPLOYMENT
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RECESSIONS, DEPRESSIONS, AND
UNEMPLOYMENT
■ Frictional unemployment
■ Structural unemployment
■ Cyclical unemployment
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RECESSIONS, DEPRESSIONS, AND
UNEMPLOYMENT
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RECESSIONS, DEPRESSIONS, AND
UNEMPLOYMENT
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RECESSIONS, DEPRESSIONS, AND
UNEMPLOYMENT
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RECESSIONS, DEPRESSIONS, AND
UNEMPLOYMENT
Social Consequences
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RECESSIONS, DEPRESSIONS, AND
UNEMPLOYMENT
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INFLATION
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INFLATION
DEFINING INFLATION
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INFLATION
PRICE INDEXES
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INFLATION
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INFLATION
TABLE 7.8 The CPI, 1950–2004
PERCENTAGE PERCENTAGE PERCENTAGE
CHANGE CHANGE CHANGE
IN CPI CPI IN CPI CPI IN CPI CPI
1950 1.3 24.1 1968 4.2 34.8 1986 1.9 109.6
1951 7.9 26.0 1969 5.5 36.7 1987 3.6 113.6
1952 1.9 26.5 1970 5.7 38.8 1988 4.1 118.3
1953 0.8 26.7 1971 4.4 40.5 1989 4.8 124.0
1954 0.7 26.9 1972 3.2 41.8 1990 5.4 130.7
1955 −0.4 26.8 1973 6.2 44.4 1991 4.2 136.2
1956 1.5 27.2 1974 11.0 49.3 1992 3.0 140.3
1957 3.3 28.1 1975 9.1 53.8 1993 3.0 144.5
1958 2.8 28.9 1976 5.8 56.9 1994 2.6 148.2
1959 0.7 29.1 1977 6.5 60.6 1995 2.8 152.4
1960 1.7 29.6 1978 7.6 65.2 1996 3.0 156.9
1961 1.0 29.9 1979 11.3 72.6 1997 2.3 160.5
1962 1.0 30.2 1980 13.5 82.4 1998 1.6 163.0
1963 1.3 30.6 1981 10.3 90.9 1999 2.2 166.6
1964 1.3 31.0 1982 6.2 96.5 2000 3.4 172.2
1965 1.6 31.5 1983 3.2 99.6 2001 2.8 177.1
1966 2.9 32.4 1984 4.3 103.9 2002 1.6 179.9
1967 3.1 33.4 1985 3.6 107.6 2003 2.3 184.0
2004 2.7 188.9
Sources: Bureau of Labor Statistics, U.S. Department of Labor.
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INFLATION
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INFLATION
People’s income from wages and salaries, profits, interest, and rent increases
during inflations. The wage rate is the price of labor, rent is the price of land,
and so on. During inflations, most prices—including input prices—tend to rise
together, and input prices determine both the incomes of workers and the
incomes of owners of capital and land.
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INFLATION
Inflation that is higher than expected benefits debtors; inflation that is lower than expected
benefits creditors.
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INFLATION
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INFLATION
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INFLATION
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REVIEW TERMS AND CONCEPTS
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