ECON 103 Lecture Notes - Lecture 1: Deepwater Horizon Oil Spill, Frictional Unemployment, Open Market Operation

• School: UMASS-Amherst
• Department: Economics
• Course: ECON 103
• Professor: Mehrene Larudee

Document Summary

U-3: people are without jobs and they have actively looked for work within the past four weeks. U-6: =u3+ marginal employed+ those unwillingly working part time. Demand issues: inequality has negative effects on demands. When demand is squeezed, investment and employment tends to shrink. Income demand ^ investment ^ employment ^ If interest rate is ^ saving ^ expenditure v debt ^ If interest rate v spend ^ debt v. Mainstream: savings= investment, solve unemployment problems, raise interest rate. Open market operations (omo) is an activity by a central bank to buy or sell gov bonds on open market. A central bank uses them as a primary means of implementing monetary policies ex. Seller (commercial bank) treasury security | cash buyer (central bank) Central bank (fed) issues currency and is the bank of the banks. Not all good things are monetized: clean air, stable climate, care labor.