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Module 12 The Meaning & Calculation of Unemployment

Module 12 The Meaning & Calculation of Unemployment. Virtual Econ Video: Unemployment. Module 12 Essential Questions. How is unemployment measured? How is the unemployment rate calculated? What is the significance of the unemployment rate on the economy?

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Module 12 The Meaning & Calculation of Unemployment

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  1. Module 12 The Meaning & Calculation of Unemployment Virtual Econ Video: Unemployment

  2. Module 12 Essential Questions • How is unemployment measured? • How is the unemployment rate calculated? • What is the significance of the unemployment rate on the economy? • What is the relationship between the unemployment rate and economic growth?

  3. Defining and Measuring Unemployment • Employed = • Unemployed = • Is a person retired receiving Social Security unemployed? • Is a disabled veteran unemployed? • Labor force participation rate: • LF Formula: • Unemployment rate: • Unemp. Formula:

  4. Defining and Measuring Unemployment • Employed = person has a job • Unemployed = actively looking for work who do not currently have a job • Is a person retired receiving Social Security unemployed? • Is a disabled veteran unemployed? • Labor force participation rate: % of population aged 16 or older that is in the labor force • LF Formula: 100 x (LF)/civilian population 16 and older • Unemployment rate: % of the total number of people in the labor force who are unemployed • Unemp. Formula: 100x (# unemployed/# Labor Force)

  5. US Unemployment Rate http://www.youtube.com/watch?v=hwWGzQ_FUtQ&feature=related http://www.tradingeconomics.com/united-states/unemployment-rate http://www.cbsnews.com/video/watch/?id=6987699n&tag=contentMain;contentAux http://www.bls.gov/bls/unemployment.htm

  6. THINK: Why is the Unemployment Rate Significant? • What is happening in the economy when the unemployment rate is low? • What is happening in the economy when the unemployment rate is rising? • What is happening in the economy when the unemployment rate is consistently high?

  7. THINK: Why is the Unemployment Rate Significant? • What is happening in the economy when the unemployment rate is low? • Sustainable economic growth • (GDP is positive & steady), • jobs are plentiful, • What is happening in the economy when the unemployment rate is rising? • Consumers are buying less products, • businesses produce less, • workers begin to be laid off • GDP begins to decline • What is happening in the economy when the unemployment rate is consistently high? • Businesses have slowed production & fired many workers • Jobs cannot be found • People without jobs do not spend or invest

  8. The Flaw of the Unemployment Rate: Underemployed Workers • Ex: The economy is weak & John has seen his hours cut from 40 to 10. He is still employed but what is the problem with his employment scenario? • Ex: Lauren has her Master’s degree, but can only find work as a bartender in a coffee shop. She still has a job, but do her skills match her work? • John and Lauren are ________________ & are not counted in the __________________.

  9. The Flaw of the Unemployment Rate: Underemployed Workers • Ex: The economy is weak & John has seen his hours cut from 40 to 10. He is still employed but what is the problem with his employment scenario? • Ex: Lauren has her Master’s degree, but can only find work as a bartender in a coffee shop. She still has a job, but do her skills match her work? • John and Lauren are underemployed & are not counted in the unemployment rate.

  10. The Imperfection of the Unemployment Rate: Discouraged Workers • Anna has been unsuccessfully seeking work for over a year, and she finally decided to give up. But, would she take a job if there was one to take? • Anna is d________________and not counted in the u_______________rate. • Not counting underemployed workers and discouraged workers causes the official unemployment scenario to appear l_______or ________ than the actual labor market conditions. • Why would the government not count these people in the UR? Explain the above cartoon.

  11. The Imperfection of the Unemployment Rate: Discouraged Workers • Anna has been unsuccessfully seeking work for over a year, and she finally decided to give up. But, would she take a job if there was one to take? • Anna is discouraged and not counted in the unemployment rate. • Not counting underemployed workers and discouraged workers causes the official unemployment scenario to appear lower or (better) than the actual labor market conditions. • Why would the government not count these people in the UR?

  12. Economic Growth & Unemployment • Draw a simple graph of the relationship between unemployment rate & Real GDP.

  13. Economic Growth & Unemployment UR • Draw a simple graph of the relationship between unemployment rate & Real GDP. 0 Real GDP

  14. Activity: Calculating Labor Markets Calculate: Labor force participation rate. Unemployment rate. Unemployment rate with discourages workers.

  15. Activity: Calculating Labor Markets Calculate: Labor force participation rate. 153,170 / 236,832 = 64.7% Unemployment rate. 14,837 / 153,170 = 9.7% Unemployment rate with discouraged workers. (14,837 + 1,065) / 153,170 + 1,065) =10.3 %

  16. Unemployed?

  17. Unemployed?

  18. Complete Module 12 p. 124-125Read Module 13 p. 126-132Strive for a 5 Module 12

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