Transcript PPT

What traditionally happens to
unemployment and poverty rates
during a contraction or
recession?
They rise
What is the basic definition of an
unemployed person?
someone who wishes to work but
cannot find a job
Identify three types of
unemployment.
frictional (moving from job to
job), structural (change in
technology), seasonal, &
cyclical (tied to business cycle)
How do many workers in
seasonal industries solve the
problem of seasonal
unemployment?
By migrating to areas that have
work at that time (areas in
season)
Name three of the five causes of
structural unemployment.
Development of new technology,
discovery of new resources,
changes in demand, globalization,
lack of education
Fiscal Policy is built around the
supply of public goods, such as
_____, ______, and _____.
Schools, roads, national defense,
fire/police protection, national
parks
What type of employment are
we most worried about right
now? Why?
Cyclical, because we won’t get relief
until the economy recovers
How is the unemployment rate
computed?
Total number of unemployed people
divided by total workforce (all
Americans over 16 who want to
work)
Where does the unemployment
rate hover when we are
experiencing full employment?
Between 4-6%
What does the government do to
help support unemployed workers?
How do they pay for this?
Provide unemployment benefits for
people actively looking for work;
payroll taxes paid by current
workers
What does it mean to be
underemployed? Does
underemployment increase
efficiency?
in a job that does not use all of
your skills, or gives you parttime when you want full time
In what decade did labor unions in
the US first begin to win legal rights
and recognition? What law was
behind this change?
1930s
Wagner Act
What is collective bargaining?
The negotiation between a
company’s management and
union to reach agreement on a
new contract
What are three factors
considered by workers as they
enter the labor force?
wages, needed skills, working
conditions, location, intrinsic
rewards, market trends
What are two of the key changes
in the labor force over the last
century?
more women, more capital
intensive economy, higher overall
education level
What is the theory that a college
education increases productivity
and results in higher wages?
Learning Effect
What is the theory that a person
who completes a college degree
is intelligent and hardworking?
Screening Effect
What are the two key types of
laws governments passed in the
last 50 years to protect workers?
anti-discrimination and minimum
wage laws
What was the first large scale
union in the United States? Who
did it attempt to organize?
Knights of Labor, all workers
What was the first relatively
successful union in the United
States? Who did it attempt to
organize?
American Federation of Labor
(AFL), skilled workers
Which national union sought to
organize workers across entire
industries?
CIO
A law that bans the mandatory
union membership
Right-to-work laws
What are two of the main
benefits of a sole proprietorship?
ease of start up, full personal
control, exclusive right to the
profits
What are three of the
disadvantages of a sole
proprietorship?
unlimited liability, sole
responsibility, limited growth
potential, lack of longevity
What are two advantages of
partnerships?
easy start up, specialization, shared
decision making, shared losses
What are two disadvantages of
partnership?
unlimited liability, potential for
conflict, lack of longevity
What is a horizontal corporate
combination? A vertical
combination?
horizontal: all in same phase of
production, vertical: all in different
phases of production
What is the name for a group of
businesses that share a name and
product line but are individually
owned?
franchises
What is a cooperative?
a business that is owned by its
customers (REI, the Green Bay
Packers)
What are three advantages of a
Franchise?
Standardized quality, national
advertising, financial assistance,
management training
What are three disadvantages of
a Franchise?
High franchising fees, strict operating
standards, only buy supplies from
parent company, can only sell
approved products
Who owns a corporation? Who
do they elect?
Shareholders, board of directors
What are factors that
contributed to the decline of the
labor union?
Decrease of manufacturing jobs,
increase of white-collar jobs,
industries move to South, more
women in labor force
When the union negotiates with
the management is
Collective Bargaining
What are two of the biggest
challenges unions face?
employer opposition, changing
employment patterns, negative
public opinion
What are the 3 key types of
inflation?
demand-pull (aggregate demand
pulling prices up), cost-push
and quantity theory
What are the three most commonly
used statistics for measuring the
current state of the economy?
GDP, unemployment, and the CPI
(inflation)
What kind of inflation is
created by increased
production costs?
Cost-push
What theory of inflation is
based on an increase in the
money supply?
Quantity Theory
What kind of inflation is
created by greater aggregate
demand?
Demand-pull
What is the most commonly
used measure of inflation?
How is it calculated?
Consumer Price Index (CPI);
tracking the prices of a
consistent “market basket” of
goods
What is the normal range for
inflation rates? What caused the
huge jump in inflation in the late
1970s?
1-3%;
A huge jump in food and oil prices
What does the core inflation rate
measure? Why?
Inflation rate without energy & food
prices; because energy & food
prices are the most volatile
What are three of the main
effects of inflation?
decreased purchasing power,
decreased value of wages,
increased interest rates,
decreased saving, increased
production costs
What is the typical effect of low
unemployment on inflation?
Why?
Low unemployment leads to higher
wages which usually creates
inflation through higher aggregate
demand
Name three of the main causes
of poverty.
Lack of education, Location, racial
and gender discrimination,
economic shifts, shifts in family
structure
What is the poverty line?
What does the poverty rate
measure?
The minimum income needed to
satisfy basic economic needs; the
percentage of people in a nation
living under the poverty line
What does a Lorenz curve
demonstrate?
The income gap, or disparity in
wealth holdings by percentages
of the population
What type of household is
most likely to live in poverty?
Households headed by a female
single parent
The wealthiest fifth of Americans
receives roughly what
percentage of total income? The
poorest fifth?
Almost 50%; less than 5%
What are two reasons for this
income gap?
Differences in skills and education,
inheritances, field of work
What is shift is currently taking
place in the income gap?
It is getting larger, wealthiest
Americans getting richer –
everybody else getting poorer
What is the purpose of
enterprise zones?
provide tax breaks and other
incentives to encourage
investment in areas that need
revitalization
What catch phrase demonstrates
the recent efforts to reform
welfare programs?
From welfare to workfare
Name two ways that the United
States Constitution has been
amended.
2/3 Congress & ¾ State
Legislatures, 2/3 Congress & ¾
State Conventions
The process of amending the
Constitution is a great example
of ______ism. Why?
Federalism 
Because of the interaction of federal
and state
What is the primary goal of
monetary policy?
To manage the economy by
manipulating the money supply
What are the three primary tools
used in carrying out monetary
policy?
Adjusting key interest rates,
adjusting reserve requirements for
banks, buying/selling government
securities
What impact would lower interest
rates have on the amount of
consumer borrowing? How should
this effect the economy?
Increase borrowing
Stimulate the economy
Who has the primary responsibility
for setting monetary policy in the
U.S.? What is the purpose of
monetary policy?
The Federal Reserve Board
(the FED)
Lessen the impact of business
cycles on the American economy
Which FED chairman was given
guru status in the 1990s? Who
is the current FED chairman?
Alan Greenspan
Ben Bernanke
Who appoints the members of the FED
governing board? Once appointed, are
they dependent or independent in terms
of political pressure?
The President
The FED operates independently
from political pressure
Through what type of policy
does the government attempt to
influence the economy by taxing
and spending?
Fiscal Policy
How do “supply-side” economists
view tax cuts? “Demand side”?
Tax cuts can be helpful in increasing
spendable income and aggregate
demand;
Demand side favors spending to
increase economic activity and
therefore gov’t revenue
Roughly what percentage of the
federal budget is left after
entitlements, interest, and
defense?
17%, or 2/3
What statistic is the best
measure of a nation’s standard
of living and economic output?
Why?
GDP per capita
It shows productivity and wealth
per person