Chapter 28

The focus of chapter 28 was mainly on unemployment and what kind of role it plays in the economy, detailing how the statistic is calculated along with how the economy is affected by it. For unemployment to be calculated, people either have to be employed or unemployed, with the definition of unemployed being something else than what a person might first think. It takes into account whether the person has worked before and is looking for a job, and how long it has been since the person had a job. People that have had no employment are not taken into account, skewing the statistic by saying there are less people unemployed than there should be by not taking into account certain groups of people, like college graduates looking for jobs but never having one before. Due to how the economy is, there are always some people unemployed, as both frictional and structural unemployment play roles in it and affect how many are unemployed. Frictional depends on the person as workers take time to search for jobs, while structural is because some labor markets don't have enough for everyone looking for a job. Unemployment rate ends up being an imperfect measure of joblessness mainly because of how some people might respond to government surveys, along with how it is calculated.

Chapter 27

Chapter 27 went more in depth into things discussed about in chapter 26. It also introduced new concepts and ideas, such as how to measure value of money and being able to compare it to years in the future whether it's a good idea to take an immediate payment or through compounded interest over several years. Risk aversion was also introduced, with many factors taken into account when dealing with risky trade-offs. Having more wealth causes the risk to not be worth, as marginal utility of a risky bet would be much lower the more money a person has. This causes people to not be as risky as possible to be able to maximize the amount of satisfaction they get from their money without having to worry about losing it in a bet or something equally risky. With stocks, firm specific risk can be lowered by not putting all of a person's investment in one company so as to have multiple stocks in different firms lower risk as much as possible. After a certain point though, the risk involved reaches a plateau that can't go any lower, because while firm specific risk can be lowered, total risk can't after a while. And while many people want to lower the amount of risk they have, risky behavior can also have positive gains that can compensate for the gamble the person took.

Article Review 6

The author again talks mainly about how bad the economy is doing. This time, it's more focused on how the job market is doing compared to past years. It doesn't look too good based on the information presented, as the net gain in jobs in the past few years is much less than in 2000, and the turning point in the economy. He lets his emotions come through in his writing multiple times from what looks like frustration in the current state of the economy. He constantly blames Wall Street and people associated with them due to thinking they're the main problem with trying to fix the economy, mainly because of the agendas they have to limit the spread of bad news whenever possible to consumers to keep making as much money as they can before it blows over. The job gains in the economy are much smaller than before, with the smaller gains being significantly lower than from way before, with his angry accusations seeming to be, although emotionally driven, logically sound. He takes into account the different types of jobs that are being gained in the economy, noting that part time jobs don't really do much to help and would need more than double one of the jobs to compare with a 60k job.

Chapter 26

Chapter 26's focus was on saving and investment, with how entrepreneurs and home business people would start their business in terms of money. Usually, not many people have enough money to start it on their own, and require them to get money from outside sources. There are multiple ways the money can be gotten, as there is a giant financial system in place to help with the idea of helping start ups in the country. Along with the many ways to get money, there are also many ways to pay it back, either with loans and interest, having a share of the stocks of the company, or not paying the principle but instead having to pay a certain amount forever. There are also financial intermediaries that help with the process of borrowing and paying, with banks being one of the main ones. Banks are useful for small stores that would have a hard time trying to raise money through bonds and the stock market. Usually bonds and stocks are bought from more familiar companies that the consumer can feel safe buying from them. The idea also of national saving being equal to investment comes from the analysis of a closed economy that the info can be used for a variety of economies. A government budget deficit can lead to declining growth and productivity and the nation, meaning GDP will also fall with them.

Chapter 24

While chapter 23 measured GDP and income, chapter 24 focused more on the cost of living and the calculations that come with it. The consumer price index is one of the main things that helps measure the everyday costs for consumers based on certain factors, but can be a bit misleading at times due to the fact that certain factors that can change messes with it. Due to it being calculated with the conditions that the number of items stay the same, it is not realistic at times because of how consumers would react to an increase in price of one good while the other stays the same, giving the illusion that cost of living has gone up significantly even though there are other items that might be available to buy and use. It also doesn't take into account how the introduction of a new good can play a role in what the consumer will now buy after it has been introduced. GDP deflator and consumer price index are similar in what they measure, but differ due to one focusing on the goods made in the nation (GDP), and the other on the prices out on the market and the costs to consumers (CPI). Inflation has to be taken into account in order for both to be useful as the different values of money in different periods would cause confusion as to how CPI would help with anything.

Chapter 23

Chapter 23's focus was on GDP and how it's affected by many different things happening throughout the country of which it is being measured. It is a very big process that involves a large scale of every good and service (that is in the legal market) being sold and produced. It measures the net value of total spending and revenue the country produces, in which, ideally, the numbers would be the same, with number discrepancies being due to how it's calculated in two different ways, either from the spending or selling point of view. It is an intricate system that takes into account many things but sometimes excludes stuff to get the correct value of actual GDP, along with taking into account seasonal changes. For example, the used car market would not be taken into account for the car maker, as it has already been put out in the market and sold as is. The variety of households in a country and what they buy, how much they make, whether they have a company outsourced in a different country, all affect GDP in different ways (or no way at all as outsourced companies raise GDP of the country they're located in instead of the country the person is in/from). Spending on imports/exports is also a way that GDP is affected.