https://www.youtube.com/watch?v=LzR3Aw1kXAU WORK FROM HOME

What Causes Unemployment? 3 reasons why people experience unwanted unemployment: Are between jobs. Their skills are not in demand. Economy not growing rapidly enough to provide jobs to everyone who wants them.

How the unemployment rate differs by level of education:

Unemployment contd. Not everyone in the civilian labor force can find a job. Civilian labor force: persons age 16 or older who are either employed or are unemployed but actively looking for work.

Ways to look at employment: People with jobs are employed. People who are jobless, looking for jobs, & available for work are unemployed. People who are neither employed nor unemployed are not in the labor force.

Underemployment: a measure of employment & labor utilization in the economy Looks at how well labor force is being utilized in terms of skills, experience & availability to work. Includes: Workers who are highly skilled but working in low paying jobs or low skill jobs Part-time workers who would prefer to be full time. **different from unemployment -individual is working but is not working at his full capability.

Are they in the labor force? Mr. Retired Man Mrs. Stay-at-Home Mom Mr. Homeless Man Mr. MBA working at Home Depot Joe College Mr. Big Man on High School Campus

BLS Surveys 60,000/month: considered employed if they did any work at all for pay or profit during the survey week. includes all part-time and temporary work, as well as regular full-time year-round employment.

“With a job but not at work.." on vacation Ill Having child-care problems Taking care of family or personal obligation On maternity/paternity leave Involved in an industrial dispute Prevented from working by bad weather. Persons counted as employed if they have a job at which they did not work during the survey week because they were:

Types of Unemployment: Frictional Someone loses their job (or chooses to leave it) and has to look for another one. Seasonal Only works certain parts of the year Structural structure of industry changes. Cyclical (Bust contraction/trough) not enough demand to employ all those who want to work. FRCITIONAL- # OF YEARS WORKERS STAY AT A JOB HAS DECREASED STRUCTURAL- CHANGES THAT LEAD TO IT ARE PERMANENT DISCOVERY OF NEW TECH, NEW RESOURCES

STRUCTURAL http://www.criticalcommons.org/Members/jtierney86/clips/structural-unemployment-again-30-rock

Macy's is closing 68 stores, cutting 10,000 jobs

Hidden Unemployment Made up of two types of people: Discouraged workers -not working & not actively seeking work but would like to have a job. Underemployed workers -prefer full-time work but working part-time or in jobs below their qualifications. NOT INCLUDED IN UNEMPLOYMENT REATE CALCULATION

Natural Rate of Unemployment: Combined total of frictional and structural unemployment. Hence, full-employment occurs when cyclical unemployment equals zero. economy is not in contraction/trough UNEMPLOYMENT NEVER TRULY EQUAL TO ZERO BECAUSE WILL ALWAYS HAVE SOME

Costs of Unemployment: Loss of output to the economy Loss of tax revenue Increase in govt. expenditure Loss of profits

Norway’s Butter Shortage Butter Clip

Consumer Price Index (CPI): measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services.

CPI Market Basket: Developed from detailed spending info provided by families & individuals on what they actually bought. BLS surveys 7,000 families each quarter http://econlife.com/2017/03/cost-of-living/

Market Basket: FOOD AND BEVERAGES (breakfast cereal, milk, coffee, chicken, wine, full service meals and snacks) HOUSING (rent of primary residence, owners' equivalent rent, fuel oil, bedroom furniture) APPAREL (men's shirts & sweaters, women's dresses, jewelry) TRANSPORTATION (new vehicles, airline fares, gasoline, motor vehicle insurance) MEDICAL CARE (prescriptions, medical supplies, services, glasses, eye care, hospital services) RECREATION (tv, cable tv, pets/products, sports equipment, admissions) EDUCATION & COMMUNICATION (college tuition, postage, phone services, computer software & accessories) Other GOODS & SERVICES (tobacco/ smoking products, haircuts personal services, funeral expenses)

Exclusions: CPI does not include investment items, such as stocks, bonds, real estate, and life insurance. These items relate to savings, not to day-to-day consumption expenses. http://www.bbc.com/news/business-39932653

(statistics are provided by BLS) Computing CPI Compute the basket’s cost Choose a base year and compute the index Calculate the inflation rate (statistics are provided by BLS)

Choose Base Year & Compute Index: Designate one year as base year, making it a benchmark against which other years are compared. Compute by dividing price of the basket in one year by price in the base year and multiplying by 100.

Compute the inflation rate: Base Year is 2000. Basket of goods in 2000 costs $1,200. The same basket in 2003 costs $1,236. CPI = 1.$1,236(2003) divided by $1,200-(2000/base year) 2. multiply X 100 = 103. Prices increased 3 percent between 2000 and 2003.

CPI Problems: Doesn’t reflect changes in consumption patterns. Doesn’t consider new products. Doesn’t take account of improved quality. Doesn’t measure impact of price changes on some assets. (Homes)

DWIGHT NEEDS A RAISE http://economicsoftheoffice.com/all/?jel=E31

Inflation -general increase in prices Hyperinflation- too high https://espresso.economist.com/f627237a7310aede2eb17aee33e248f6 Types of Inflation? Quantity Theory Cost Push Theory Demand Pull Theory

KEEP IT IN LINE WITH THE GDP RATE! Theory 1 The Quantity Theory Too much money in the economy leads to inflation. Inflation can be tamed by increasing the money supply at the same rate that the economy is growing. Don’t put more money into circulation if growth is slowing KEEP IT IN LINE WITH THE GDP RATE!

http://www. criticalcommons http://www.criticalcommons.org/Members/AdrianFohr/clips/hyper-inflation-in-ducktales http://www.cbsnews.com/news/jim-gaffigan-inflation-and-the-tooth-fairy/ JIM GAFFIGAN

Theory 2 The Cost-Push Theory Inflation occurs when producers raise prices in order to meet increased costs (WAGES HIKES ARE BIGGEST CAUSE) Can lead to a wage-price spiral — process by which rising wages cause higher prices, and higher prices cause higher wages.

Theory 3 The Demand-Pull Theory Inflation occurs when demand for goods and services exceeds existing supplies. Occurs during wartime/natural disaster Any other examples?

Winners and Losers High inflation is a major problem, especially when inflation rates change greatly year to year Purchasing Power In an inflationary economy, a dollar loses value. W Won’t buy same amount of goods that it did in years past. http://markets.cbsnews.com/Egyptian-agency-says-inflation-has-risen-to-315-percent/4a1ca4a409150618/ Interest Rates When a bank's interest rate matches inflation rate, savers break even. When bank's interest rate is lower than inflation rate, savers lose money. Income If wage increases match inflation rate, a worker's real income stays the same. If income is fixed income, or income that does not increase even when prices go up, the economic effects of inflation can be harmful.

INFLATION WINNERS AND LOSERS: Fixed-rate mortgage holders Retired people on fixed income College students who got fixed rate loan

REVIEW https://www.youtube.com/watch?v=3GTgniuxA50 http://www.detroitnews.com/story/business/2017/03/17/beef-price/99318628/ Falling Beef Prices