Unemployment
Objective: • What are the different types of unemployment? • How are unemployment rates determined? • What is full employment? *Be sure to leave a couple blank lines under each question and answer the questions at the end of the lesson. Chapter 13
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CA Standard(s) Covered 12.5 Students analyze the aggregate economic behavior of the U.S. economy. 2. Define, calculate, and explain the significance of an unemployment rate, the number of new jobs created monthly, an inflation or deflation rate, and a rate of economic growth.
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Types of Unemployment Frictional Unemployment • Occurs when people change jobs, get laid off from their current jobs, take some time to find the right job after they finish their schooling, or take time off from working for a variety of other reasons. Seasonal Unemployment • Occurs when industries slow or shut down for a season. Structural Unemployment • Occurs when workers' skills do not match the jobs that are available. Technological advances are one cause of structural unemployment. Cyclical Unemployment • Unemployment that rises during economic downturns and falls when the economy improves. Chapter 13
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Determining the Unemployment Rate • A nation’s unemployment rate is an important indicator of the health of the economy. • The Bureau of Labor Statistics polls a sample of the population to determine how many people are employed and unemployed. • The unemployment rate is the percentage of the nation’s labor force that is unemployed. • The unemployment rate is only a national average. It does not reflect regional economic trends.
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Full Employment Full employment is the level of employment reached when there is no cyclical unemployment. • Economists generally agree that in an economy that is working properly, an unemployment rate of around 4 to 6 percent is normal. • Sometimes people are underemployed, that is working a job for which they are over-qualified, or working part-time when they desire full-time work. • Discouraged workers are people who want a job, but have given up looking for one.
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Section 1 Assessment 1. Unemployment that occurs when workers’ skills do not match the jobs that are available is known as (a) frictional unemployment. (b) structural unemployment. (c) seasonal unemployment. (d) cyclical unemployment. 2. The unemployment rate (a) is the percentage of the labor force that is unemployed. (b) is the number of people who are unemployed. (c) includes only discouraged workers. (d) is the percentage of the labor force that is underemployed.
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Section 1 Assessment 1. Unemployment that occurs when workers’ skills do not match the jobs that are available is known as (a) frictional unemployment. (b) structural unemployment. (c) seasonal unemployment. (d) cyclical unemployment. 2. The unemployment rate (a) is the percentage of the labor force that is unemployed. (b) is the number of people who are unemployed. (c) includes only discouraged workers. (d) is the percentage of the labor force that is underemployed. Want to check unemployment rates??? Click Here!
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• Read pages 331-336 and complete questions 1-4 p.336 Chapter 13
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Inflation Objective: • What are the effects of rising prices? • How do economists use price indexes? • What are the causes and effects of inflation? *Be sure to leave a couple blank lines under each question and answer the questions at the end of the lesson. Chapter 13
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CA Standard(s) Covered 12.5 Students analyze the aggregate economic behavior of the U.S. economy. 2. Define, calculate, and explain the significance of an unemployment rate, the number of new jobs created monthly, an inflation or deflation rate, and a rate of economic growth.
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The Effects of Rising Prices • Inflation is a general increase in prices. In 1950 in South San Francisco: – House (2 bed, 1 bath): $14,500 – Average income: $3,216 per year – Ford car: $1339 – Milk: $.82 per gallon – Gas: $.20 per gallon – Postage stamp: $.03 • Purchasing power, the ability to purchase goods and services, is decreased by rising prices. Chapter 13
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Price Indexes A price index is a measurement that shows how the average price of a standard group of goods changes over time. • The consumer price index (CPI) is computed each month by the Bureau of Labor Statistics. • The CPI is determined by measuring the price of a standard group of goods meant to represent the typical“market basket” of an urban consumer. • Changes in the CPI from month to month help economists measure the economy’s inflation rate. • The inflation rate is the percentage change in price level over time.
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Causes of Inflation The Quantity Theory • The quantity theory of inflation states that too much money in the economy leads to inflation.
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The Demand-Pull Theory
The Cost-Push Theory
• The demand-pull • According to the theory states that cost-push inflation occurs theory, inflation when demand for occurs when goods and producers raise services exceeds prices in order existing supplies. to meet increased costs.
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Effects of Inflation • High inflation is a major economic problem, especially when inflation rates change greatly from year to year. Purchasing Power – In an inflationary economy, a dollar loses value. It will not buy the same amount of goods that it did in years past. Income – If wage increases match the inflation rate, a worker's real income stays the same. If income is fixed income, or income that does not increase even when prices go up, the economic effects of inflation can be harmful. Interest Rates – When a bank's interest rate matches the inflation rate, savers break even. When a bank's interest rate is lower than the inflation rate, savers lose money.
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Section 2 Assessment 1. Inflation is (a) the process by which rising wages cause higher prices. (b) the price increase of a typical group of goods. (c) a general increase in prices. (d) the ability to purchase goods and services. 2. Too much money in the economy is the cause of inflation according to (a) the quantity theory. (b) the demand-pull theory. (c) the quantum theory. (d) the cost-push theory.
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Section 2 Assessment 1. Inflation is (a) the process by which rising wages cause higher prices. (b) the price increase of a typical group of goods. (c) a general increase in prices. (d) the ability to purchase goods and services. 2. Too much money in the economy is the cause of inflation according to (a) the quantity theory. (b) the demand-pull theory. (c) the quantum theory. (d) the cost-push theory.
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HW
• Read pages 338-343 and complete questions 1-4 p. 343.
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Poverty Objective: • Who is poor, according to government standards? • What causes poverty? • How is income distributed in the United States? • What government programs are intended to combat poverty? *Be sure to leave a couple blank lines under each question and answer the questions at the end of the lesson.
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CA Standard(s) Covered 12.3 Students analyze the influence of the federal government on the American economy. 3. Describe the aims of government fiscal policies (taxation, borrowing, spending) and their influence on production, employment, and price levels. 12.4 Students analyze the elements of the U.S. labor market in a global setting. 1. Understand the operations of the labor market, including the circumstances surrounding the establishment of principal American labor unions, procedures that unions use to gain benefits for their members, the effects of unionization, the minimum wage, and unemployment insurance. Chapter 13
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Who Is Poor? The Census Bureau collects data about how many families and households live in poverty. The Poverty Threshold
The Poverty Rate
• The poverty threshold is an income level below which income is insufficient to support a family or household.
• The poverty rate is the percentage of people in a particular group who live in households below the official poverty line.
– In 2010 = $14,570 (single parent w/ 1 child)
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– African Americans / Latinos = 2X more than Whites Main Menu
Causes of Poverty Lack of Education (#1 cause of poverty) (Link to Education & Income Chart) •
The median income of high-school dropouts in 2010 was $18,608. (The 2009-2010 poverty threshold for 1 individual is: $10,830)
Location •
On average, people who live in the inner city earn less than people living outside the inner city.
Racial and Gender Discrimination •
Some inequality exists in wages between whites and minorities, and men and women.
Economic Shifts •
Workers without college-level skills have suffered from the ongoing decline of manufacturing, and the rise of service and high technology jobs.
Shifts in Family Structure •
Increased divorce rates result in more single-parent families and more children living in poverty.
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Income Distribution in the United States Income Gap • A 2010 study showed that the richest 3.1 million Americans earn 21.2 percent of all U.S. income, which is as much as the poorest 110 million Americans. • Or, in another words, the richest 1 percent of Americans earned the same as the poorest 36 percent of Americans. • Link to Graphs Chapter 13
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Government Policies Combating Poverty The government spends billions of dollars on programs designed to reduce poverty. • Employment Assistance – The minimum wage and federal and state job-training programs aim to provide people with more job options. • Welfare Reform – Temporary Assistance for Needy Families (TANF) is a program which gives block grants to the states, allowing them to implement their own assistance programs. – Workfare programs require work in exchange for temporary assistance. Chapter 13
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Section 3 Assessment 1. An income level below which income is insufficient to support a family or household is known as the (a) income gap. (b) poverty rate. (c) poverty threshold. (d) income inequality. 2. What’s the #1 cause of poverty? (a) Location (b) Economic Shifts (c) Lack of Education (d) Shifts in Family Structure Let’s check out the up-to-date poverty line. Click Here!
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Section 3 Assessment 1. An income level below which income is insufficient to support a family or household is known as the (a) income gap. (b) poverty rate. (c) poverty threshold. (d) income inequality. 2. What’s the #1 cause of poverty? (a) Location (b) Economic Shifts (c) Lack of Education (d) Shifts in Family Structure Let’s check out the up-to-date poverty line. Click Here!
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HW
• Read pages 345-350 and complete questions 1-5 p.350
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Education and Income • Potential earnings increase with increased educational attainment. 89664 62618 47422 Ave. Yearly Earnings in 2010
28788 22552 18608
Doctoral Degree
Master's Degree
Bachelor's Degree
Associate Degree
HS Graduate
Less than HS Diploma
Source: U.S. Census Bureau
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• Over the past 20 years, earnings for college graduates have increased, while earnings for workers without college degrees have decreased.
