1. Unemployment

2. What is Unemployment?
People 16 and older who looked for work in the past 30 days
People not looking for work are NOT unemployed (they just don’t have a job)

3. Four Types of Unemployment
Frictional – temporarily between jobs
Cyclical – people without jobs because firms do not need their labor because of a downturn in business cycle
Structural – mismatch between job seekers and opening (lack of skills/education)
Seasonal- unemployment that occurs as a result of harvest schedules of vacations, or when industries slow or shut down for a season

4. Unemployment Rate Number unemployed/total number in labor force
How can the unemployment rate rise when more people are getting jobs?

5. Labor Force
People in the Labor Force are those with jobs or those looking for jobs. If they are not in the Labor Force, they do not count towards unemployment rate.

6. Out of the Labor Force
Unemployment does not measure people who are out of the labor force.
Discouraged workers: people who want jobs but are no longer looking. Does not count towards unemployment rate.
Full-time students, unpaid homemakers, retirees, independently wealthy and do not work. Do not count towards unemployment rate

7. What Kind of Unemployment
A computer programmer is laid off because of a recession.
A literary editor leaves her job in New York to look for a new job in San Francisco.
An unemployed college graduate is looking for his first job.
Advances in technology make the assembly-line worker’s job obsolete.
Slumping sales lead to the cashier being laid off.
An individual refuses to work for minimum wage.
A high school graduate lacks the skills necessary for a particular job.
Workers are laid off when the local manufacturing plant closes because the product made there is not selling.
A skilled glass blower becomes unemployed when a new machine does her job faster.

8. Problems with Unemployment Rate
Does not include people who are underemployed.
Example: a person with a law degree working at McDonalds.
Underemployed: skills are above current job individuals have.

9. Aggregate Demand & Supply

10. Aggregate Demand & Supply
Total demand for final goods and services
Consumption, Government spending, Investment, and Net Exports (sound familiar?)
X axis is GDP
Y axis is Price

11. What is the difference between aggregate supply and aggregate demand?
Aggregate supply is the
total amount of goods
and services produced
throughout the economy.
Aggregate demand is the
total amount of spending
by individuals and
businesses throughout
the economy.