ECON 104 1st Edition Lecture 4 Outline of Last Lecture I. The Development of MacroeconomicsA. Where Macroeconomics Came FromB. How We Affected the MacroeconomyC. How Inflation Enters the Formula II. Depression vs. RecessionA. Definition/ExamplesB. Differences With Latest RecessionIII. The Three Goals of MacroeconomicsIV. Goal #1: EmploymentA. Current UnemploymentB. How Unemployment is MeasuredC. How Labor Force Participation Rates Show Us Problems With The EconomyD. Five Types of UnemploymentE. Costs of Unemployment and UnderemploymentOutline of Current Lecture I. Second Goal of Microeconomics: Price StabilityA. Inflation and DeflationB. DefinitionsCurrent LectureI. Second Goal of Microeconomics: Price Stability Inflation and Deflation- Low Inflation is the goal- 2-4% inflation is generally considered low, but there is much debate about this- 1979 - 13.3 % inflation- July 2007 – July 2008: 5.6% inflation- Deflation? We have had some deflation in the last 2 years, and only -.4% deflation for 2009- Average Inflation Rate 2010: 1.6% 2011: 3.2% 2012: 2.1%These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute. 2013: 1.5%* Deflation is a sign of a bad economy – a little bit of inflation is actually good. However, too much inflation may be a sign that the economy is “too booming” and could be detrimental.* Right now, our economy is not inflating enough Definitions- Inflation: the rise in the general level of prices Inflation is not defined by JUST oil prices or JUST one food item it is defined by all of the things we buy as an economy- Inflation Rate: the percentage of change in the price index- Deflation: a decrease in the average level of prices- Hyper Inflation: unbelievably high inflation- Stagflation: inflation and unemployment at the same