Inflation and Unemployment - Foundation For Teaching Economics
The quantity theory of inflation states that too much money in the economy leads to inflation. What government programs are intended to combat poverty?. Poverty Meaning Absolute and relative poverty Causes of poverty Unemployment Meaning Types Causes Remedies Inflation Meaning Types. Economic Challenges: Unemployment, Inflation, and Poverty Complete the back of your worksheet titled “Types of Unemployment Part II”; Or 2. BUY LOW, SELL HIGH; Sell the stock at a high price, and you make the difference in cash.
Unemployment imposes costs on individuals and nations. Unexpected inflation imposes costs on many people and benefits some others because it arbitrarily redistributes purchasing power. Inflation can reduce the rate of growth of national living standards, because individuals and organizations use resources to protect themselves against the uncertainty of future prices.
Inflation reduces the value of money. The unemployment rate is the percentage of the labor force that is willing and able to work, does not currently have a job, and is actively looking for work. The unemployment rate is an imperfect measure of unemployment because it does not 1 include workers whose job prospects are so poor that they are discouraged from seeking jobs, or 2 reflect part-time workers who are looking for full-time work.
Unemployment rates differ for people of different ages, races, and sexes. This reflects differences in work experience, education, training, and skills, as well as discrimination. Unemployment can be caused by people changing jobs, by seasonal fluctuations in demand, by changes in the skills needed by employers, or by cyclical fluctuations in the level of national spending.
Full employment means that the only unemployed people in the economy are those who are changing jobs. The consumer price index CPI is the most commonly used measure of price-level changes. It can be used to compare the price level in one year with price levels in earlier or later periods. Expectations of increased inflation may lead to higher interest rates. The costs of inflation are different for different groups of people.
Inflation and Unemployment
Unexpected inflation hurts savers and people on fixed incomes; it helps people who have borrowed money at a fixed rate of interest. Inflation imposes costs on people beyond its effects on wealth distribution because people devote resources to protect themselves from expected inflation. Review the circular flow model developed in the previous session.
Review the total spending equation: Referencing the national economic goals of equity, stability, and full employment, use the circular flow model to point out how dis-equilibrium between changes in total expenditures and changes in total output affects price and employment levels.
Burkhardt, A / Unemployment/Inflation
Demonstrate how changes in employment and price levels are natural conditions of a market economy. Define the employment rate and the unemployment rate, and demonstrate how they are calculated.
Demonstrate how both can rise at the same time. Relate to the circular flow model and business cycle model.
Economic Challenges: Unemployment, Inflation, and Poverty.
Define the natural rate of unemployment and emphasize its necessity to a healthy economy. Identify the historical patterns re which level of government tends to deal with each type of problem unemployment. Identify limitations of unemployment data and discuss issues related to measurement of unemployment. Model a process for analyzing the impact of employment policies — for example, minimum wage laws or right-to-work laws. Define inflation and differentiate from changes in relative prices.
Review the difference between real and nominal values. Define and distinguish between the consumer price index CPI and the GDP deflator as measures of inflation, and demonstrate how each is calculated.
Identify limitations of CPI data and discuss issues related to measurement of inflation. Identify the consequences of inflation and discuss issues related to those consequences, including: Purchasing Power In an inflationary economy, a dollar loses value. It will not buy the same amount of goods that it did in years past. Interest Rates When a bank's interest rate matches the inflation rate, savers break even.
When a bank's interest rate is lower than the inflation rate, savers lose money. Income If wage increases match the inflation rate, a worker's real income stays the same. Keynesian Economics Keynesian economics is the idea that the economy is composed of three sectors — individuals, businesses, and government — and that government actions can make up for changes in the other two.
Keynesian economists argue that fiscal policy can be used to fight both recession or depression and inflation. Keynes believed that the government could increase spending during a recession to counteract the decrease in consumer spending. What could be the problems if everybody had the same income no matter what? Nobody will fail and there will be no pressure. Why or why not? Poverty Statistics Some areas are much more expensive then others so it costs more to stay out of poverty NYC vs.
NC Most of the poor in the U. Blacks and Hispanics are about twice as likely to be poor as members of other racial groups. Over a third of the poor in the U. Families headed by a female without a husband present are more than five times as likely to be poor as families headed by married couples.
Why are some people in poverty and others are not? Location On average, people who live in the inner city earn less than people living outside the inner city. Shifts in Family Structure Increased divorce rates result in more single-parent families and more children living in poverty. Economic Shifts Workers without college-level skills have suffered from the ongoing decline of manufacturing, and the rise of service and high technology jobs.
Racial and Gender Discrimination Some inequality exists in wages between whites and minorities, and men and women. Poverty Who is poor, according to government standards? How is income distributed in the United States?
What government programs are intended to combat poverty?