1. Economics Ch. 13
Economic Challenges

2. Ch Unemployment

3. Frictional Unemployment
Occurs when people take time to find a job
Between jobs
After college
Finding the right job

4. Seasonal Unemployment

5. Structural Unemployment
Workers skills do not match the jobs available
New Technology
New Resources
Changes in Consumer Demand
Globalization
Lack of Education

6. Cyclical Unemployment
Unemployment that rises during economic downturns
The Great Depression
FDR – Social Security Act of 1935
Seniors
Payment to those laid off

7. Full Employment 4 – 6 % is normal rate of unemployment
Underemployment – taking jobs that you are overqualified for
Discouraged Workers—stopped looking for a job – Dec – 315,000 became discouraged no longer a part of the unemployment figures

8. 13.2 Inflation
General increase in prices Purchasing power declines

9. Types of Inflation

10. Quantity Theory Too much money in circulation causes inflation
Key to stable prices—increase money supply at same rate as economy is growing

11. Demand Pull Theory
Inflation occurs when demand for goods exceeds existing supply
Wages also rise with the increase in demand for labor

12. Cost Push Theory
Inflation occurs when producers raise prices to meet increased costs
Higher prices for raw material = increase cost
Wage price spiral-rising wages = higher prices, higher prices cause higher wages

13. Effects of Inflation
Purchasing Power – dollar does not buy the same amount that it once did
Income – erodes income if wages do not increase with inflation—cost of living increase. Fixed incomes do not increase – pension plans
Interest Rates –if they are below inflation then you lose money

14. 13.3 Poverty

15. Poverty Rate 2010

16. Poverty Rate
The nation's poverty rate rose to 15.1% in 2010, its highest level since In 2009, 14.3% of people in America were living in poverty.
About 46.2 million people are now considered in poverty, 2.6 million more than last year.
The government defines the poverty line as income of $22,314 a year for a family of four and $11,139 for an individual.

17. Poverty in US
ensus_poverty_map/index.html?iid=EL

18. Indicators of Poverty
Race – Af. Am. / Hispanics – more than twice the rate of white americans
Type of Family – Single mother = 6 times greater than 2 parent
Age – Children significantly larger
Residence – Inner city

19. Causes of Poverty Lack of Education Location
Racial/Gender Discrimination
Economic Shifts—last hired first fired
Shifts in family structure
Antipoverty Policies
Enterprise zones – companies locate free of certain taxes
Employment Assistance – job training programs; minimum wage since 1938
Welfare Reform – Welfare to workfare – attempt to get people off of welfare