Types of Unemployment Occurs when people are without

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Types of Unemployment: Occurs when people are without work and are actively seeking work.

Types of Unemployment: Occurs when people are without work and are actively seeking work. Frictional Unemployment • Take time to find a job Structural Unemployment • Workers' skills do not match the jobs that are available Seasonal Unemployment • Industries slow or shut down for a season Cyclical Unemployment • Unemployment that rises during economic downturns and falls when the economy improves Chapter 13 Section Main Menu

Determining the Unemployment Rate • A nation’s unemployment rate is an important indicator of

Determining the Unemployment Rate • A nation’s unemployment rate is an important indicator of the health of the economy. • The unemployment rate is the percentage of the nation’s labor force that is unemployed. • Current US unemployment rate – 7. 5% • State of CA unemployment rate – 9. 4% • County of Orange unemployment rate – 7. 6% Chapter 13 Section Main Menu

Unemployment Chapter 13 Section Main Menu

Unemployment Chapter 13 Section Main Menu

Full Employment • An unemployment rate of around 4 to 6 percent is normal.

Full Employment • An unemployment rate of around 4 to 6 percent is normal. • Underemployed - working a job for which a person is over-qualified, or working part-time. • Discouraged workers - 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. Chapter 13 Section Main Menu

Inflation • What are the effects of rising prices? • How do economists use

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? Chapter 13 Section Main Menu

The Effects of Rising Prices • Inflation is a general increase in prices. •

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. • Current Rate of Inflation – 1. 06% http: //www. usinflationcalculator. com/ Chapter 13 Section Main Menu

Orange, Riverside and Los Angeles Chapter 13 Section Main Menu

Orange, Riverside and Los Angeles Chapter 13 Section Main Menu

Price Indexes A measurement that shows how the average price of a standard group

Price Indexes A measurement that shows how the average price of a standard group of goods changes over time. • Consumer price index (CPI) - determined by measuring the price of a standard group of goods meant to represent the typical “market basket” of an urban consumer. Examples include: food, clothing, shelter, fuel, transportation fares, charges for doctors' and dentists' services, drugs, and the other goods and services that people buy for day-to-day living • CPI change helps economists measure the economy’s inflation rate. • The inflation rate is the percentage change in price level over time. Chapter 13 Section Main Menu

Causes of Inflation The Quantity Theory The Cost-Push Theory • Too much money in

Causes of Inflation The Quantity Theory The Cost-Push Theory • Too much money in the economy leads to inflation. • Inflation occurs when producers raise prices in order to meet increased costs. • Cost-push inflation can lead to a wageprice spiral — the process by which rising wages cause higher prices, and higher prices cause higher wages. Chapter 13 Section Main Menu The Demand-Pull Theory • Demand for goods and services exceeds supply.

Effects of Inflation • Major Problems of Inflation Purchasing Power Interest Rates Income Chapter

Effects of Inflation • Major Problems of Inflation Purchasing Power Interest Rates Income Chapter 13 Section Main Menu

Poverty • Who is poor, according to government standards? • What causes poverty? •

Poverty • 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? Chapter 13 Section Main Menu

Who Is Poor? The Poverty Threshold The Poverty Rate • The poverty threshold is

Who Is Poor? 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 who live in households below the official poverty line. • 50 million ppl. , 15 million of which are children • About 16% of total population The Census Bureau collects data about how many families and households live in poverty. Chapter 13 Section Main Menu

Poverty Guidelines Chapter 13 Section Main Menu

Poverty Guidelines Chapter 13 Section Main Menu

Interactive Poverty Map • http: //old. usccb. org/cchd/pov/map. htm Chapter 13 Section Main Menu

Interactive Poverty Map • http: //old. usccb. org/cchd/pov/map. htm Chapter 13 Section Main Menu

Causes of Poverty Lack of Education • Education and Income are directly correlated. Shifts

Causes of Poverty Lack of Education • Education and Income are directly correlated. Shifts in Family Structure • Increased divorce rates result in more single-parent families and more children living in poverty. • Families with females as head of house and no husband have higher rates of poverty. Economic Shifts • Workers without college-level skills have suffered from the ongoing decline of manufacturing, and the rise of service and high technology jobs. Chapter 13 Section Main Menu

Education/Income Attainment United States Estimate Margin of Error Total: 33, 107 +/-44 Less than

Education/Income Attainment United States Estimate Margin of Error Total: 33, 107 +/-44 Less than high school graduate 19, 089 +/-61 High school graduate (includes equivalency) 26, 712 +/-31 Some college or associate's degree 32, 793 +/-39 Bachelor's degree 46, 277 +/-62 Graduate or professional degree 61, 014 +/-116 Male: 40, 136 +/-47 Less than high school graduate 22, 524 +/-86 High school graduate (includes equivalency) 32, 462 +/-45 Some college or associate's degree 40, 883 +/-55 Bachelor's degree 56, 798 +/-113 Graduate or professional degree 76, 470 +/-207 Female: 26, 939 +/-28 Less than high school graduate 14, 051 +/-64 High school graduate (includes equivalency) 21, 031 +/-40 Some college or associate's degree 26, 869 +/-40 Bachelor's degree 38, 216 +/-84 Graduate or professional degree 50, 483 +/-109 Chapter 13 Section Main Menu

Education and Income • Median personal and household income according to different education levels

Education and Income • Median personal and household income according to different education levels Chapter 13 Section Main Menu

Chapter 13 Section Main Menu

Chapter 13 Section Main Menu

Income Distribution in the United States Income Gap/Inequality • In 2010, the top 20%

Income Distribution in the United States Income Gap/Inequality • In 2010, the top 20% of Americans earned 49. 4% of the nation’s income, compared with 3. 4% earned by Americans living below the poverty line • The top group received 440 times as much as the average person in the bottom half earned. • The income gap has doubled since 1980. Called the “Great Divergence” • Differences in skills, effort, and inheritances are key factors in understanding the income gap. Chapter 13 Section Main Menu

US Income Distribution 2009 Chapter 13 Section Main Menu

US Income Distribution 2009 Chapter 13 Section Main Menu

Government Policies Combating Poverty • Employment Assistance – This program helps the unemployed to

Government Policies Combating Poverty • Employment Assistance – This program helps the unemployed to gain skills and obtain and hold a job. • Welfare – Temporary Assistance for Needy Families (TANF) • Medicaid The government spends billions of dollars on programs designed to reduce poverty. Chapter 13 Section Main Menu

Deflation • Deflation is a general decline in prices – the opposite of inflation.

Deflation • Deflation is a general decline in prices – the opposite of inflation. • Can be caused by a reduction in the supply of money or credit, or by a decrease in consumer, government and business spending. • Declining prices, if they persist, generally create a vicious spiral of negatives such as falling profits, closing factories, shrinking employment and incomes, and increasing defaults on loans by companies and individuals. • To counter deflation, the Federal Reserve (the Fed) can use monetary policy to increase the money supply and deliberately induce rising prices, causing inflation. Chapter 13 Section Main Menu