• Unit 2: Output, Employment, and Unemployment

    Individuals must make a choice between spending their time working or pursuing other activities like raising a family, leisure, or enhancing health and wellness. When individuals offer their services for work, they receive a wage in exchange for giving up alternative choices. Commensurate with the individual's choice, firms must also demand labor for an employment market to exist. When the wage individuals demand equals the wage offered by firms, equilibrium exists.

    The government is very active in most labor arrangements. Aside from regulating the work environment, government typically provides minimum guarantees of wage, unemployment insurance, and a system of income in retirement. Macroeconomists have various ways of modeling the trends, effects, and causes of unemployment. Sustained high levels of unemployment may lead to societal difficulties.

    Completing this unit should take you approximately 17 hours.

    • Upon successful completion of this unit, you will be able to:

      • explain the standard theory in macroeconomics at an intermediate level;
      • synthesize the impact of employment and unemployment in a free market economy; and
      • explain and use the basic tools of macroeconomic theory, and apply them to help address problems in public policy.

    • 2.1: Output and Employment

      • Output and Employment URL

        Read Chapter 2 on pages 38–52 and 58–61. Consider a time you had to make a decision about whether to work or do something else. Think about how that choice is replicated throughout an entire economy.

      • Macroeconomics Lecture 3 URL

        Listen to this lecture.

    • 2.2: Business Cycles and Policies

    • 2.3: Unemployment

      • Unemployment URL

        Read Chapter 4 on pages 77–97. Consider how various wages are arrived at, and the role of government in bridging income gaps with unemployment insurance.

    • Unit 2 Assessment

      • Unit 2 Assessment Quiz
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