Macroeconomic

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LABOR FORCE

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Refers to the sum of employed and unemployed workers in the economy

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UNEMPLOYMENT RATE

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is the percentage of the labor force that is unemployed.

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Discouraged worker

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refer to the people who are available for work, but have not looked for a job during the previous four weeks because they believe no jobs are available for them.

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Unemployment rate

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Number of employed divided by Labor Force and multiply by 100 = Labor Force Participation rate

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Why woman work more than man nowadays?

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-Social
-Education
-Requirement
-Gap of Divorce

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TYPE OF UNEMPLOYMENT

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1. Frictional Unemployment
2. Structural Unemployment
3. Cyclical Unemployment
4. Natural rate of Unemployment

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LABOR UNION

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are organizations of workers that bargain with employers for higher wages and better working conditions for their members

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Efficiency Wages

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is a higher than market wage that a firm pays to increase worker productivity

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Job Search

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is the process by which workers find appropriate jobs given their taste and skills

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Kind of Inflation

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1. Mild Inflation: The annual rate of inflation range from 2 to 4% a year
2. Moderate inflation: the annual rate of inflation range from 5 to 9%

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Kind of inflation (Cont)

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3. Severe Inflation: the annual rate of inflation is 10% or higher
4. Hyperinflation is rapid, uncontrolled inflation that destroys a nation's economy

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Price Level

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is a measure of the average price of goods and services in the economy

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Inflation Rate

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is the percentage increase in the price level from one year to the next

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CPI

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It is important that the CPI be as accurate as possible, but there are four biases that make changes in the CPI overstate the true inflation rate

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The four biases of CPI

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1. Substitution Bias
2. Increase In Quality Bias
3. New Product Bias
3. Outlet Bias

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Producer Price Index (PPI)

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An average of the price received by producers of goods and services at all stages of the production process

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Nominal Average Hourly Earning

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are often referred to as the nominal wage, and real average hourly earning are often referred to as the real wage

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Why inflation and deflation are problems?

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Unexpected inflation or deflation
- Redistribute income
- Redistributes Wealth
- Lowers real GDP and Employment
- Diverts resources from Production

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Economic Growth

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An increase in the total output of an economy. Defined by some economists as an increase of real GDP per capita

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Financial System

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Consists of institutions that help to match savers with borrowers

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Business Cycle

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Alternating periods of economic expansion and economic recession

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Factor of production

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By increasing its input of resources and the productivity those inputs

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Labor Productivity

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The quantity of goods and services that can be produced by one worker or by one hour of work

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Increases in Capital Per Hour Worked

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Capital Manufactured goods that are used to produce other goods and services

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Financial System

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the system of financial markets and financial intermediaries through which firms acquire funds from households

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Financial Intermediaries

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Firms such as banks mutual funds, pension fund and insurance companies, that borrow funds from savers and lend them to borrowers

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Market for loanable Fund

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the interaction of borrowers and lenders that determines the market interest rate and the Quantity of Loanable funds exchanged

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Why is the economy More Stable?

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- The increasing importance of services and the declining importance of goods
- The establishment of unemployment insurance and other government transfer programs that provide funds to the unemployment
- Active federal government policies to stabilize the economy

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The standard of Living in Economy

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depends on the economy's ability to produce goods and services and Productivity depend on the physical capital, human capital, natural resource and technological knowledge available to workers

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What determine How Fast Economic Grow

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1. Economic Growth Model
2. Labor Productivity
3. Technological Change

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Economic Growth Model

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explains growth rate in real GDP per capita over the long run

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Labor Productivity

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the quantity of goods and service that can be produced by one worker or by one hour of work

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Technological change

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a change in the quantity of output a firm can produce using given quantity of inputs

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The three main source of technological Change

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1. Better Machinery and Equipment
2. Increase in the human capital
3. Better means of organizing and managing production

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Exogenous Growth Theory

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by

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Endogenous Growth Theory

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By

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Government Policy can help increase the accumulation of knowledge capital in three ways

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1. Protecting intellectual property with patents and copyright
2. Subsidizing research and development
3. Subsidizing education

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Government Policies can try to influence the economy's growth rate in many ways

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1. Encourage saving and investment
2. Encourage investment from Abroad
3. Fostering education, promoting good health, maintaining property rights and political stability
4. Allowing free trade and promoting the research and development of new technology

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Property Right

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the individual individuals or firms have to the exclusive use of their property, including the right to buy or sell it

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Rule of Law

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The ability of a government to enforce the laws of the country, particularly with respect to protecting protecting private property and enforcing contracts

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Why isn't the whole world rich?

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1. Wars and Revolution
2. Poor Public Education and Health
3. Low rates of saving and investment

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The benefits of Globalization

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1. Foreign Direct Investment
2. Foreign Portfolio Investment
3. Globalization( More Open to Trade and Investment

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Type and Modes of FDI inflow to developing Countries

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Classified by Motive
1. Resource-seeking Investors
2. Marketing-seeking Investors
3. Efficiency-seeking investors
4. Strategies- seeking investors
Classified by target
1. Greenfield Investment
2. Mergers and Acquisitions
3. Joint Venture
4. Production sharing contract