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ECONOMICS
Chapter 13
Economic Challenges
Types of Unemployment
 Frictional – people “inbetween” a job
 Seasonal – people
unemployed due to the
time of year
 Structural – people
unemployed due to their
inability to match their
skills to the right job
 Cyclical – unemployed
due to the recession or
contraction of the
economy
(unemployment above
5%)
Unemployment Rate
 # Unemployed x 100
Labor Force
 Labor Force = #Employed + #Unemployed
 Employed = all who work at least part time
 Unemployed = those 16 or older who are
actively looking for a job, but cannot find work
 Full Employment = when the unemployment
rate is 5% or less
Calculating Inflation
 Loss of purchasing
power of the dollar
 Calculated by first
calculating the
Consumer Price
Index (CPI)
 Compares the
current year’s price
with last year’s price
on a select list of
commonly purchased
household goods
Consumer Price Index
 Price of Goods in the Current Year x 100
Price of Goods in the Last Year
 To get the inflation rate from the above CPI
calculation:
 CPI (Current Year) – CPI (Base Year) x 100
CPI (Base Year)
Types of Inflation
 Demand Pull – the
demand for the
product exceeds the
supply
 Cost Push – high
production costs are
passed along to the
end consumer