1. S TANDARD 5 C HAPTER 13 E CONOMIC S TRUGGLES

2. U NEMPLOYMENT How is it measured? Unemployment rate- the percentage of the labor force that is jobless and actively looking for work What doesn’t the unemployment rate measure? Underemployment- part time workers who want to work full time or people working below their skill level (i.e. a doctor working at Burger King) People who have stopped looking for work

3. U NEMPLOYMENT (C ONT.) What is it today and how is that compared to our unemployment history? 9.6% in September 2009 (Indiana) 10.2% in October 2009 (United States) 9.9% in August 2010 (Indiana) 9.2% in September 2010 (United States) Since the start of the recession in December 2007, the number of unemployed persons has risen by 8.2 million, and the unemployment rate has grown by 5.3 percentage points. What is our goal? Full employment- no unemployment caused by decreased economic activity

5. T YPES OF U NEMPLOYMENT Frictional unemployment Seasonal unemployment Structural unemployment Cyclical unemployment

6. What kind of unemployment is each of these situations? Farm workers? Someone who left their old job because they disliked their employer? Someone fired because their employer is not selling enough products? Someone who lost their job making cassette walkmen?

7. W HY IS UNEMPLOYMENT BAD ? It is inefficient- it is a waste of valuable human resources Inequality- creates a jobless underclass Discouraged workers- people who are jobless or underemployed for a long time become unmotivated and may do poor work

8. P OVERTY AND I NCOME D ISTRIBUTION What is poverty ? The condition where a person’s income and resources do not allow him or her to achieve a minimum standard of living The poverty threshold or poverty line is the minimum income needed to pay for the basic expenses of living. 13.2 percent in 2008 For one person- $10,830 For a family of four (2 adults and 2 children)- $22,050 14.3 percent in 2009

9. W HAT IS THE POVERTY RATE ? It is the percentage of people living below the poverty threshold.

10. W HAT AFFECTS POVERTY ? Education Discrimination Demographic trends Changes in the labor force

11. H OW DO WE TRY TO STOP POVERTY ? Welfare Food stamps Medicaid Social Security Workfare

13. G ROUP D ISCUSSION Describe Will Smith’s character. How does living under the poverty threshold affect Chris’s marriage? Relationship with his son? His overall happiness? How does the title relate to the Declaration of Independence? Do you think this job will really make him happy?

14. I NFLATION Inflation- a sustained rise in the level of prices generally or a sustained decrease in purchasing power. How is it measured? Consumer Price Index (CPI)- a measure of changes in the prices of goods and services commonly purchased by consumers. Producer Price Index (PPI)- a measure of change in wholesale prices Inflation Rate- the rate of change in prices over a set period of time.

15. T YPES OF I NFLATION Creeping inflation Galloping Inflation Hyperinflation Deflation

16. W HAT CAUSES INFLATION ? Demand-pull inflation- results when total demand rises faster than the production of goods and services Cost-push inflation- results when increases in the costs of production push up prices. Inputs like labor, land, capital, and management Wage-price spiral- a cycle that begins with increased wages, which lead to higher production costs, which in turn result in higher prices, which result in demands for higher wages.

17. W HAT IS THE IMPACT OF INFLATION ? Decreasing Value of the Dollar- people on fixed incomes are hit hard. They do not receive wage increases. EX: social security Increasing Interest Rates- borrowing money becomes more expensive. Credit card payments raise. Consumers buy less items that require borrowing like houses and cars. Decreasing Real Returns on Savings- if the inflation rate is higher than your interest rate, you can lose money that you are trying to save.