ECSENOMICS Chapter 31 Unemployment and the foundations of Aggregate Supply McGraw-Hilllrwin Copyright C 2001 The McGraw-Hill Companies, Inc. All rights reserved
McGraw-Hill/Irwin Copyright © 2001 The McGraw-Hill Companies, Inc. All rights reserved. Chapter 31 Unemployment and the Foundations of Aggregate Supply
ECSENOMICS How Do Growth in Potential Output and Cost Increases Affect Aggregate Supply T230 Figure 31-1 (a) Increase in Potential Output (b) Increase in Costs AS Potential Potentia AS Q Q Real output Real output McGraw-Hilllrwin Copyright C 2001 The McGraw-Hill Companies, Inc. All rights reserved
McGraw-Hill/Irwin Copyright © 2001 The McGraw-Hill Companies, Inc. All rights reserved. T-230 Figure 31-1 How Do Growth in Potential Output and Cost Increases Affect Aggregate Supply?
ECSENOMICS In Reality, Aggregate Supply Shifts Combine t Cost Increases and Increased Potential Output T231 Figure 31-2 Aggregate Supply and potential Output 1.8 6 AS’ curve for 1999 4 E 11.2 0.8 0.6 AS curve for 1982 0.4 0.2 2,000 4.000 6.0008,00010,000 Real GDP(billions, 1996 prices) McGraw-Hilllrwin Copyright C 2001 The McGraw-Hill Companies, Inc. All rights reserved
McGraw-Hill/Irwin Copyright © 2001 The McGraw-Hill Companies, Inc. All rights reserved. In Reality, Aggregate Supply Shifts Combine Cost Increases and Increased Potential Output T-231 Figure 31-2
ECSENOMICS AS Is Relatively Flat in the Short Run s but Turns Vertical in the Long Run T232 Figure 31-3 (a)Short Run (b) Long run AS Real outp eal output McGraw-Hilllrwin Copyright C 2001 The McGraw-Hill Companies, Inc. All rights reserved
McGraw-Hill/Irwin Copyright © 2001 The McGraw-Hill Companies, Inc. All rights reserved. AS Is Relatively Flat in the Short Run but Turns Vertical in the Long Run T-232 Figure 31-3
ECSENOMICS Labor-Force status of the Population, 1999 T233 Figure 31-4 Males Females Not in labor force Not in labor force 55-64 Employed Employed 20-24 16-19 09 20% 40% V60% 80% 1009 Ut loved McGraw-Hilllrwin Source: U.S. Department of Labor, Employment and Earnings
McGraw-Hill/Irwin Copyright © 2001 The McGraw-Hill Companies, Inc. All rights reserved. Labor-Force Status of the Population, 1999 T-233 Figure 31-4 Source: U.S. Department of Labor, Employment and Earnings
ECSENOMICS S> Okun's Law Illustrated,1955-1999 T234 Figure 31-5 Okuns Law 5E= 0 三 2 0 4 6 8 Change in real GDP(percent) McGraw-Hilllrwin Source: U.S. Departments of Commerce and Labor
McGraw-Hill/Irwin Copyright © 2001 The McGraw-Hill Companies, Inc. All rights reserved. Okun’s Law Illustrated, 1955-1999 T-234 Figure 31-5 Source: U.S. Departments of Commerce and Labor
ECSENOMICS Inflexible Wages Can Lead to Involuntary Unemployment T235 Figure 31-6 (a) Flexible Wages (b) Inflexible Wages ed \unemployment Voluntary d labor foree) (labor force Labor (persons) McGraw-Hilllrwin Copyright C 2001 The McGraw-Hill Companies, Inc. All rights reserved
McGraw-Hill/Irwin Copyright © 2001 The McGraw-Hill Companies, Inc. All rights reserved. Inflexible Wages Can Lead to Involuntary Unemployment T-235 Figure 31-6
ECSENOMICS Most Unemployment in the United States is Short-Term T236 Figure 31-7 45 35 25 15 10 10-1415-2627-51 5 Duration of unemployment, 1999(weeks) McGraw-Hilllrwin Source: U.S. Department of labor, Employment and Earnings, January 2000
McGraw-Hill/Irwin Copyright © 2001 The McGraw-Hill Companies, Inc. All rights reserved. Most Unemployment in the United States is Short-Term T-236 Figure 31-7 Source: U.S. Department of Labor, Employment and Earnings, January 2000
ECSENOMICS Distribution of Unemployment by reason, 1999 T237 Figure 31-8 Recession Unemployment by Reason (percent of the labor foree that is unemployed for different reasons Reentrant lob loser New entrant Job leaver 0.8 0.6 Job leaver 1982 McGraw-Hilllrwin Source: U.S. Department of labor, Employment and Earnings
McGraw-Hill/Irwin Copyright © 2001 The McGraw-Hill Companies, Inc. All rights reserved. Distribution of Unemployment by Reason, 1999 T-237 Figure 31-8 Source: U.S. Department of Labor, Employment and Earnings
ECSENOMICS Unemployment Rates of Different Groups T238 Figure 31-9 Black teens White teens All white worke 0 1975 1980 1985 caI McGraw-Hilllrwin Source: U.S. Department of labor
McGraw-Hill/Irwin Copyright © 2001 The McGraw-Hill Companies, Inc. All rights reserved. Unemployment Rates of Different Groups T-238 Figure 31-9 Source: U.S. Department of Labor