ECON282 Lecture Notes - Lecture 26: Unemployment, Procyclical And Countercyclical, Potential Output

• School: University of Alberta
• Department: Economics
• Course: ECON282
• Professor: Alexander Gainer

Document Summary

Recessions are most severe and last longer than expansions. Economists focus on recessions- how they can be made less severe ad shorter in duration. Hits low-income workers much harder than middle-income or high-income workers. Become rusty and fall behind (unaware of) on advancement market. Most common- manufacturing jobs who lay off workers. Can go into depression, start drugs, commit crimes etc. Ofte(cid:374) shorter a(cid:374)d do(cid:374)"t push the e(cid:272)o(cid:374)o(cid:373)(cid:455) too (cid:373)u(cid:272)h higher tha(cid:374) pote(cid:374)tial gdp. Biggest problem is that if the economy grows too quickly, it quickly rises inflation rises. A(cid:374)other pro(cid:271)le(cid:373) is that (cid:271)usi(cid:374)esses do(cid:374)"t take s(cid:373)art de(cid:272)isio(cid:374)s- they try to get resources as quickly as possible- inefficient allocation of resources. Employment- if employment is rising, it means that economy is doing well. Gdp take a long time to calculate and even then, the numbers are preliminary. Economists just estimate gdp tot eh best of their ability. Unemployment- if economy is doing well, unemployment goes down.