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Unemployment
• What are the different types of unemployment?
• How are unemployment rates determined?
• What is full employment?
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Vocabulary
• Frictional Unemployment
• Seasonal Unemployment
• Structural Unemployment
• Cyclical Unemployment
• Unemployment rate
• Census
• Full Employment
• Underemployed
• Discouraged Worker
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Unemployment Video
Video Part 1
Video Part 2
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Types of Unemployment
1. 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
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Structural Unemployment
Occurs when workers'
skills do not match
the jobs that are
available.
Technological
advances are one
cause of structural
unemployment
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Seasonal Unemployment
• Occurs when industries slow or shut down for a
season or make seasonal shifts in their production
schedules
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Cyclical Unemployment
Unemployment that rises during economic downturns
and falls when the economy improves
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What Kind of Unemployment is It?
1. John was not satisfied with his job as a teacher so he
left his job to begin looking for a position as a
bartender. What type of unemployment is this?
(frictional, structural, seasonal, or cyclical)
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Answer
Frictional
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What type of unemployment is it?
Adam worked at an auto factory but lost
his job because a robot was invented to
do his work. What type of unemployment
is this?
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Answer
Structural
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What type of unemployment is it?
The current unemployment rate in the U.S. is 9.6%. This
is a huge increase from the 4.5% rate at the beginning
of 2007. Which type of unemployment do you think is
causing the majority of the increase?
(structural, seasonal, frictional, cyclical)
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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.
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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
• 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 parttime when they desire full-time work.
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Discouraged workers are people who want
a job, but have given up looking for one.
Full employment is the level of employment
reached when there is no cyclical
unemployment. (4-6 Percent)
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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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Chapter 13
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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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Assignment
You have been given one of the types of unemployment to
write about. Imagine that you are a person experiencing that
type of unemployment.
1. On a sheet of paper Identify the type of unemployment
and create a profile of an imaginary character (name,
background, marital status, children, former occupation,
etc..)
2. Write three diary entries from the perspective of this
imaginary person. The entries need to explain how the
person became unemployed, how the person feels about
being unemployed, and the actions she or he has taken
since becoming unemployed
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Inflation
• What are the effects of rising prices?
• How do economists use price indexes?
• How is the inflation rate calculated?
• What are the causes and effects of inflation?
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Vocabulary
• Inflation
• Purchasing Power
• Price Level
• Inflation Rate
• Consumer Price Index
• Market Basket
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The Effects of Rising Prices
• Inflation is a general increase in prices.
• Purchasing power, the ability to purchase
goods and services, is decreased by rising
prices.
• Price level is the relative cost of goods
and services in the entire economy at a
given point in time.
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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.
Market Basket – A representative collection of goods and
services.
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Consumer Price Index
Year 2
Year 1
$103.00
$100
There was a 3% increase in the price for the
market basket of goods. (same goods, more
money)
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Inflation
• 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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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.
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•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.
•Savings $100
•Interest 3%
•End of Year $103.00
$103.00
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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.
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Inflation hurts those on fixed income the most.
Why?
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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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Section 3 - Poverty
• Objectives:
• Define who is poor according to government
standards
• Describe the causes of poverty
• Analyze the distribution of income in the U.S.
• Summarize government policies intended to
combat poverty
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Vocabulary
• Poverty Threshold
• Poverty Rate
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Poverty Threshold – The income level below
which income is insufficient to support a family
or household.
• In 2004 – The poverty threshold for a single
parent under the age of 63 with one child was
$12,490
• A family of 4 with 2 children - $18,850
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• Poverty Rate – The percentage of people
who live in households with income
below the official poverty level.
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Causes of Poverty
• Lack of Education
• Location
• Racial and Gender Discrimination
• Economic Shifts
• Shifts in Family Structure
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Income Inequality
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