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 Complete ALL blue box questions on pages 497 and 498 Turn in for classwork credit when finished

EL: ECONOMIC INDICATORS 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

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

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?