526 Miller Economics Today, Nineteenth Edition
Chapter 7 The Macroeconomy: Unemployment,
Inflation, and Deflation
The Nobel Prize for Economics and the Natural Unemployment Rate
The winner of the Nobel Prize for economics in 2006 was Edmund Phelps, who developed the concept of
the natural rate of unemployment. His original argument was that the economy will not reach equilibrium
in which all long-run forces work themselves out in the economy and it is in long–run equilibrium.
Are a Self-Employed Dad and a Daughter Who Is Not Working
Part of the Labor Force?
Johnson is a self-employed painter. On most days, he paints room interiors alone. From time to time,
however, he has taken on exterior house-painting jobs, which pay implicitly higher hourly rates.
Whenever he has tackled home exteriors, he has usually hired his daughter, who will be 18 years old next
Until the late nineteenth century, people in the United States were not acquainted with the word
Lecture Extender Examples 527
Recessions and the Electoral Blame Game
As a result of the recession that began in 2007 and continued into 2009, the unemployment rate rose to as
high as 10 percent. By the time of the presidential and congressional elections of 2012, the economic
Deflation and Real Interest Rates in Japan
Around the turn of the century, wholesale and consumer prices fell in Japan. In 2002, for example,
consumer prices fell by 0.4 percent. Short–term interest rates averaged around 0.1 percent. Assuming
How Reliable Is the CPI?
The CPI is a fixed-quantity price index, meaning that each month the Bureau of Labor Statistics samples
only prices rather than relative quantities purchased by consumers. The problem is that when relative
528 Miller Economics Today, Nineteenth Edition