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

E L : E C O N O M I C I N D I C AT O R S

UNEMPLOYMENT

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

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

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?