Macroeconomics Study Guides

Keep the following two comprehensive study guides handy throughout your macroeconomics course study. They provide brief oulines for many of the major macroeconomics topics studied in this course and can help prepare you for your final economics exams.

Principles of Macroeconomics Lecture Notes

PART IV: Unemployment

Measuring Unemployment

  • Standardized Unemployment Rate:

Labor Force = #Employed + #Unemployed but Looking Unemployment Rate = # Unemployed but Looking/Labor Force

This is the definition used in most countries, including the U.S.

Types of Unemployment 

  • Frictional Unemployment: Result of Matching Behavior between Firms and Workers.
  • Structural Unemployment: Result of Mismatch of Skills and Employer Needs  + Industry/Product structural change

  • Cyclical Unemployment: Result of Output being below full-employment
  • Is Zero Unemployment a Reasonable Policy Goal?

– No! Frictional and Structural Unemployment may be desirable (unavoidable).


Why We Care About Unemployment

  • Depreciation of Human Capital
  • Productive Extranalities 
  • Social Extranalities
  • Individual Self Worth