Chapter 13SectionMain Menu Types of Unemployment Unemployment: Occurs when people are without work and are actively seeking work. Frictional Unemployment Take time to find a job Structural Unemployment Workers' skills do not match the jobs that are available Seasonal Unemployment Industries slow or shut down for a season Cyclical Unemployment Unemployment that rises during economic downturns and falls when the economy improves

Chapter 13SectionMain Menu Determining the Unemployment Rate A nation’s unemployment rate is an important indicator of the health of the economy. The unemployment rate is the percentage of the nation’s labor force that is unemployed. Current US unemployment rate – 7.5% State of CA unemployment rate –9.4% County of Orange unemployment rate –7.6%

Chapter 13SectionMain Menu Unemployment

Chapter 13SectionMain Menu Full employment is the level of employment reached when there is no cyclical unemployment. Full Employment An unemployment rate of around 4 to 6 percent is normal. Underemployed - working a job for which a person is over-qualified, or working part-time. Discouraged workers - people who want a job, but have given up looking for one.

Chapter 13SectionMain Menu Inflation What are the effects of rising prices? How do economists use price indexes? How is the inflation rate calculated? What are the causes and effects of inflation?

Chapter 13SectionMain Menu The Effects of Rising Prices Inflation is a general increase in prices. Purchasing power, the ability to purchase goods and services, is decreased by rising prices. Current Rate of Inflation – 1.06%

Chapter 13SectionMain Menu Orange, Riverside and Los Angeles

Chapter 13SectionMain Menu A measurement that shows how the average price of a standard group of goods changes over time. Price Indexes Consumer price index (CPI) - determined by measuring the price of a standard group of goods meant to represent the typical “market basket” of an urban consumer. Examples include: food, clothing, shelter, fuel, transportation fares, charges for doctors' and dentists' services, drugs, and the other goods and services that people buy for day-to-day living CPI change helps economists measure the economy’s inflation rate. The inflation rate is the percentage change in price level over time.

Chapter 13SectionMain Menu The Quantity Theory Too much money in the economy leads to inflation. The Cost-Push Theory Inflation occurs when producers raise prices in order to meet increased costs. Cost-push inflation can lead to a wage- price spiral — the process by which rising wages cause higher prices, and higher prices cause higher wages. The Demand-Pull Theory Demand for goods and services exceeds supply. Causes of Inflation

Chapter 13SectionMain Menu Effects of Inflation Major Problems of Inflation Purchasing Power Interest Rates Income

Chapter 13SectionMain Menu Poverty Who is poor, according to government standards? What causes poverty? How is income distributed in the United States? What government programs are intended to combat poverty?

Chapter 13SectionMain Menu The Census Bureau collects data about how many families and households live in poverty. Who Is Poor? The Poverty Threshold The poverty threshold is an income level below which income is insufficient to support a family or household. The Poverty Rate The poverty rate is the percentage of people who live in households below the official poverty line. 50 million ppl., 15 million of which are children About 16% of total population

Chapter 13SectionMain Menu Poverty Guidelines

Chapter 13SectionMain Menu Interactive Poverty Map

Chapter 13SectionMain Menu Causes of Poverty Lack of Education Education and Income are directly correlated. Shifts in Family Structure Increased divorce rates result in more single-parent families and more children living in poverty. Families with females as head of house and no husband have higher rates of poverty. Economic Shifts Workers without college-level skills have suffered from the ongoing decline of manufacturing, and the rise of service and high technology jobs.

Chapter 13SectionMain Menu Education/Income Attainment United States EstimateMargin of Error Total:33,107+/-44 Less than high school graduate19,089+/-61 High school graduate (includes equivalency)26,712+/-31 Some college or associate's degree32,793+/-39 Bachelor's degree46,277+/-62 Graduate or professional degree61,014+/-116 Male:40,136+/-47 Less than high school graduate22,524+/-86 High school graduate (includes equivalency)32,462+/-45 Some college or associate's degree40,883+/-55 Bachelor's degree56,798+/-113 Graduate or professional degree76,470+/-207 Female:26,939+/-28 Less than high school graduate14,051+/-64 High school graduate (includes equivalency)21,031+/-40 Some college or associate's degree26,869+/-40 Bachelor's degree38,216+/-84 Graduate or professional degree50,483+/-109

Chapter 13SectionMain Menu Education and Income Median personal and household income according to different education levels

Chapter 13SectionMain Menu

Chapter 13SectionMain Menu Income Distribution in the United States Income Gap/Inequality In 2010, the top 20% of Americans earned 49.4% of the nation’s income, compared with 3.4% earned by Americans living below the poverty line The top group received 440 times as much as the average person in the bottom half earned. The income gap has doubled since Called the “Great Divergence” Differences in skills, effort, and inheritances are key factors in understanding the income gap.

Chapter 13SectionMain Menu US Income Distribution 2009

Chapter 13SectionMain Menu The government spends billions of dollars on programs designed to reduce poverty. Government Policies Combating Poverty Employment Assistance –This program helps the unemployed to gain skills and obtain and hold a job. Welfare –Temporary Assistance for Needy Families (TANF) Medicaid

Chapter 13SectionMain Menu Deflation Deflation is a general decline in prices – the opposite of inflation. Can be caused by a reduction in the supply of money or credit, or by a decrease in consumer, government and business spending. Declining prices, if they persist, generally create a vicious spiral of negatives such as falling profits, closing factories, shrinking employment and incomes, and increasing defaults on loans by companies and individuals. To counter deflation, the Federal Reserve (the Fed) can use monetary policy to increase the money supply and deliberately induce rising prices, causing inflation.