- Slides: 25
COMING SOON… • Extended Bellringer • HANDOUT!
AGENDA • • Extended Bellringer (Do and Review) Textbook reading: Unemployment Notes: Unemployment Exit ticket
EXTENDED BELLRINGER • Complete the investments vocabulary handout
ECONOMIC INDICATORS • Our country uses three specific indicators to gauge the health of our economy: • Unemployment rate • Inflation rate • Gross Domestic Product (GDP)
ECONOMIC INDICATORS • Poverty rate is not predictable, but some economists consider it in calculations • Today we start with unemployment….
TEXTBOOK READING • Read pages 487 -495 • Complete ALL blue box questions on pages 497 and 498 • Turn in for classwork credit when finished
UNEMPLOYMENT EL: ECONOMIC INDICATORS
ECONOMIC INDICATORS • Economic indicators tell us how our economy is doing • The hope is that these indicators will help us “predict” if our economy is heading towards another depression • Three forms: • Inflation rate • Unemployment • GDP
MEASURING UNEMPLOYMENT • BLS polls a large number of American families • Labor force: civilians aged 16+ who have a job or are actively seeking one • Number of employed people + unemployed = total labor force • Divide number of unemployed people by the total labor force x 100 = unemployment rate
UNEMPLOYMENT • Different types of unemployment that economists consider: • • Frictional Seasonal Structural Cyclical
FRICTIONAL UNEMPLOYMENT • Occurs when people take their time to find a job • Could be after a lay off or finishing with college • Unsatisfied with current job and wish to seek better employment • The time period while they are actively seeking work is considered frictional unemployment
SEASONAL UNEMPLOYMENT • Occurs when industries slow down or shut down for a season workers are laid off temporarily • Construction workers/farmers • NOT counted by BLS in unemployment statistics because these workers are not ACTIVELY seeking new employment, they are waiting for their next employment cycle
STRUCTURAL UNEMPLOYMENT • Occurs when workers skills do not match the jobs available • As the structure of the economy changes so does the skills needed to succeed in job market • Examples: home deliveries of Ice, statistics generated by hand, phone books, seamstresses, etc….
STRUCTURAL UNEMPLOYMENT • Causes of it: • Development of new technology • Discovery of new resources • Globalization • Lack of Education • Labor pool not keeping up
CYCLICAL UNEMPLOYMENT • Occurs when unemployment rises during economic downturns and falls when the economy improves • During recessions, demand for goods/services drops, employees are laid off (Cost-Push inflation) • During economically prosperous times, demand increases, and more workers are hired • Demand for goods has a direct correlation to demand for labor
FULL EMPLOYMENT • Zero unemployment is not an achievable goal for a market economy • In a properly functioning market economy an unemployment rate of 4 -6% is normal (good) • Underemployed: those working jobs which they are overqualified for or working part time when they desire full time • How will Affordable Care Act affect employment?
OTHER WORKERS… • Discouraged workers: people who give up seeking employment during long recessions • These workers are not calculated into unemployment rate because they are not actively seeking work
BUSINESS CYCLE • Recession – contraction in economic activity. Generally 6 -18 months. • Depression – at a point where economic activity has reached its lowest level. Long lasting Recession (over 18 months). • Recovery – Expansion/increased economic activity; end of recession/depressions • Based on supply and demand! • The Business cycle is completely normal in our economy. We just want to avoid depression and get out of recessions quickly
BUSINESS CYCLE • Economists agree that they cannot predict when or how long each phase will last • Only certainty is that if an economy is growing, it will eventually face a downturn and then bounce back
CAUSES OF BUSINESS CYCLE • Investment • After a series of large expansions and purchases, businesses stop investing in themselves for a while, until needed again • Interest rates and credit • When interest rates are low and credit is readily available, more businesses are willing to take loans for expansion • Consumer expectations • When consumers worry about their finances they start “saving for a rainy day” which can cause a contraction • Inflation/Unemployment • External shocks • Wars, sanctions, disruption in oil supply
EXIT TICKET • Identify the four types of unemployment • Identify the three phases of the business cycle
POVERTY • What causes poverty? • What do you think poverty really is? • What is currently being done about it? • What do you think should be done?