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  1. Recessions: An Economy’s Second Worst Nightmare

  2. A good economy depends on a lot of production and consumption- a bad economy lacks in one of the two

  3. Sometimes, for a variety of reasons, people stop buying things • When they do, factories will have to slow production

  4. Layoffs are sure to follow • With people out of work, they will usually not be in the mood to go out and buy big ticket items like cars or appliances

  5. This will cause the factories to slow down even more • When business activity stalls to a visible extent, we call that a recession

  6. When a recession takes place, one of the symptoms is higher unemployment rates • Unemployment is defined as the situation when people do not have the job but are actively seeking another

  7. Rate itself is computed by dividing the number of people who are unemployed by the number of people in the labor force • Labor force does not include people under 16, those who cannot work, and those who have stopped looking for work

  8. When American population was 270 million people, approximately 120 million people are considered part of the labor force

  9. Unemployment should never hit 0% • At the best of times, when the economy is strongest, around 3 to 5 % of the workforce is unemployed

  10. The Bureau of Labor Statistics keeps track of joblessness is different age groups, races, and genders

  11. Structural- happens when certain industries become obsolete. Workers with certain skills have no place to go

  12. Seasonal- landscapers, farmers, and certain tourism jobs are tossed out of work at certain downtimes during the year

  13. Frictional- people who are just entering the job market or those who have decided to leave to seek out “greener pastures” • This is the largest segment of the overall unemployment figure during periods of strong economic growth and high employment

  14. Cyclical- certain industries are hit hard by downturns in the economy • Auto workers are typically laid off during recessions as they wait for consumers to buy more of their companies’ products

  15. Questions: • High unemployment affects all of society. What do you think are the three biggest social effects of joblessness are? • Create a definition for recession