Transcript lows national unemployment

• Warm-up: Write down 3 words that
describe unemployment, and 3 words that
describe poverty
• Now list 2 people that you know, their job
and 3 of their job functions. Tell me what
could happen to get rid of their position
and one thing that could happen to
increase the need for that position.
Ch 13: Economic Challenges
13.1 Unemployment
• In the late 1990’s, early 2000’s
lows
unemployment in the US hit record_____.
It is not just a personal issue – it is an
national economy.
issue for the _______
unemployment to
• Economists look at ____________
determine the health of the economy.
• Frictional Unemployment
– When people take time
____ to find a job
• Seasonal Unemployment
season
– When industries slow or shut down for a _______
• Structural Unemployment
do not match the jobs that are
– When workers’ skills ____________
available (farming, industrial, technological)
• Cyclical Unemployment
– Rises during economic downturns and falls
when economy improves (Great Depression)
– During recessions
_________ of the business cycle the
demand for goods and services drops.
– This then causes the demand
_______ for labor to
drop.
– The worst was during the Great Depression –
when ¼
__ of workers were laid off.
• FULL Employment
no cyclical
– Level reached when there is __________
employment
• Underemployment
– Working at a job for which they are
over-qualified or working part-time when they
___________,
desire full-time work
• Some people give up hope of finding work.
These _________
discouraged workers have stopped
searching for employment.
Activity:
Create a Character
• Create a fictional worker. Write a
paragraph explaining each person’s
employment situation. Include why these
workers are discouraged or
underemployed, their current financial
situation, and their view of the future.
– Discouraged, underemployed, frictional,
seasonal, structural or cyclical (groups)
Ch 13.3 Inflation
• As inflation rises, every dollar will buy a
_______
smaller percentage of a good. For
example, if the inflation rate is 2%, then a
$1 pack of gum will cost $1.02 in a year.
Most countries' central banks will try to
2-3%.
sustain an inflation rate of _____
• During World War II, you could buy a loaf of bread for $0.15, a new
car for less than $1,000 and an average house for around $5,000. In
the twenty-first century, bread, cars, houses and just about
everything else cost more. A lot more. Clearly, we've experienced a
significant amount of inflation over the last 60 years.
When inflation surged to double-digit
_________ levels in the mid- to late1970s, Americans declared it public enemy No.1. Since then, public
fearful
anxiety has abated along with inflation, but people remain ________
of inflation, even at the minimal levels we've seen over the past few
years. Although it's common knowledge that prices go up over time,
the general population doesn't understand the forces behind
inflation.
INFLATION
• Inflation is a general ________
increase in prices.
Consumer Price Index
• CPI: ____________________
measures
the price of a standard group of goods
meant to represent the “market basket”
Market Basket
• The CPI market basket is developed from detailed expenditure
information provided by families and individuals on what they
actually ________.
For the current CPI, this information was
bought
collected from the Consumer Expenditure Surveys for 2005 and
2006. In each of those years, about 7,000 families from around the
country provided information each quarter on their spending habits
in the interview survey. To collect information on frequently
purchased items, such as food and personal care products, another
7,000 families in each of these years kept diaries listing everything
they bought during a 2-week period.
• Over the 2 year period, then, expenditure information came from
approximately 28,000 weekly diaries and 60,000 quarterly interviews
used to determine the importance, or weight, of the more than
________________
200
item categories in the CPI index structure.
•
The CPI represents all goods and services purchased for consumption by
the reference population (U or W) BLS has classified all expenditure items
into more than 200 categories, arranged into eight major groups. Major
groups and examples of categories in each are as follows:
•
•
•
•
•
•
•
•
Food and beverages (milk, coffee, chicken, wine, snacks)
Housing (rent, fuel oil, furniture)
Apparel (shirts, sweaters, jewelry)
Transportation (cars, airline fares, gas, car insurance)
Medical care (prescriptions, medical supplies, eye care)
Recreation (tv, toys, pets, sports equipment)
Education and communication (tuition, postate, telephone, computers)
Other goods and services (tobacco, haircuts, funeral expenses)
Market Basket Cont.
does not
• The CPI _________
include investment
items, such as stocks, bonds, real estate,
and life insurance. (These items relate to
savings and not to day-to-day
consumption expenses.)
• About every 10
_______
years the items in the
updated to account
market basket are ________
for shifting consumer buying habits.
Types of Inflation
• Core inflation rate
• Hyperinflation – out of control – worst type
Causes of Inflation
• Quantity Theory: ______________
too much money
supplies
• Demand-pull: demand exceeds _______
thus forcing prices up.
• Cost-push: when producers raise price to
meet increased cost (primarily led by wage
increase)
– Wage-price spiral (p. 342) A feedback loop in
which wage hikes due to inflation cause companies to
raise prices, and those rising prices lead to demand
for further wage increases, perpetuating the cycle.
The opposite = today
Effects of Inflation
decreases
• Purchasing Power __________
• People on fixed income have less.
– ___________:
Fixed income does not increase when prices
go up
lose money if the inflation
• Savers may __________
rate is higher than their banks interest rate
Ch 13.3 Poverty
POVERTY
Poverty threshold income level below
• ______________:
which income is insufficient to support a
family
• Cause of Poverty: Education, location,
race, gender, change in family structure,
economic shift.
Income Inequality
• The highest ___
1/5 of the population have
___
13 times more than the lower 1/5
Lorenz curve illustrates the
• The ___________
distribution of income in the economy.
• The lowest 20% of households received
3.6% of the nations income
• The lowest 40% (2/5) received 12.5%
• The wealthiest 1/5 of US households have
____
50%
Lorenz Curve
Income Gap Cont.
• Differences in skills and education
• Inheritances
Anti-Poverty Policies
• Enterprise Zones: create jobs/opportunity
in rundown areas – revitalize
________ inner cities
or rural areas
minimum wage
• Employment Assistance: _____________
and grants for education
• Welfare
• Suppose you are in charge of creating an
antipoverty program for your state. Create
a list of at least 5 proposals for your
program.
• Make a flyer for one of your programs &
present