ECON 1113 1st Edition Lecture 8 Outline of Last Lecture I. Macroeconomic MeasurementsA. Measuring the Value of Economic Activity: Gross Domestic Product (GDP)1. Nominal GDP (Current Dollar GDP)2. Real GDP (Constant Dollar GDP)B. Measuring the Cost of Living: Consumer Price Index (CPI)C. Measuring Joblessness: Unemployment Rate (U/L)Outline of Current Lecture I. Recent Developments in the Labor MarketII. Real GDP and the Business CycleCurrent LectureI. Recent Developments in the Labor MarketA. Wall Street Journal Article1. US adds 257,000 jobs in January of 20152. Unemployment ticks up to 5.7%a. Labor Force = Employed + Unemployedb. L = E + U (looking for a job)c. Unemployment rate = U/L or U/(E+U)d. (U/L) in December: 56/999 = 5.6%e. (U/L) in January: 57/1000 = 5.7%II. Real GDP and the Business SectorA. The value of domestically produced goods and services valued at constant pricesB. Diagram of the Business Cycle1. Unrealistic curvatures in generalized diagram2. Although decreases exist in the oscillating curve, it steadily increases3. Expansion Phase: increasing section of trenda. Problem: inflation – rising prices as measured by some price index like the CPI4. Contraction Phase: decreasing section of trend, also called a recessiona. Problem: unemployment5. Peak: occurs after an expansion phase and before a contraction phase6. Trough: occurs after a contraction phase and before an expansion phaseC. Realistic Diagram of the Business Cycle Based on the early twentieth century1. 1914-1919: increase as WWI ragesThese 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.2. 1919-1921: post-war decrease3. 1921-1929: increase of the roaring 20’s4. 1929-1939: decrease of the Great Depression5. 1939-1946: beginning of WWII6. Unemployment occurs during the decreases7. Inflation occurs during the
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