An indicator or signal to tell how well the economy is performing

Workers make choices that are influenced by incentives

If employers think their businesses will expand they hire workers.

If employers think their businesses will contract, they let workers go.

When workers think job prospects are good, they enter the job market and look for a job.

If workers think prospects are poor, they may choose to leave the labor market entirely.

Jobs are a concern to AmericansMost people rely on a job to earn an

income.Loss of a job is devastating for an

individual or family.

1990 5.6

1991 6.8

1992 7.5

1993 6.9

1994 6.1

1995 5.6

1996 5.4

1997 4.9

1998 4.5

1999 4.2

2000 4.0

2001 4.7

2002 5.8

2003 6.0

2004 5.5

2005 5.1

2006 4.6

2007 4.6

Employed people are people with jobs.Unemployed people are people without

jobs.The civilian labor force is the number of

people aged 16 years and older who are not in the armed forces.

The Bureau of Labor Statistics is the government agency that tracks the number of people who are employed and unemployed.

The civilian labor force is the number of people aged 16 years and older who are not in the armed forces and who are employed or are seeking employment

Employed people are people with jobs.The unemployment rate is the percentage

of the civilian labor force that is unemployed.

Acceptable rate of unemployment 4-6%

What agency measures and reports the employment and unemployment statistics?

Who gets classified as being in the labor force?

If I am sick on the day the people from the BLS call, am I in the labor force?

If I am in jail, am I in the labor force?If I am a stay –at-home parent, am I in the

labor force?

If I have just graduated from high school and have begun looking for a job, without success, am I in the labor force?

How is the unemployment rate calculated?

Frictional unemployment People who are temporarily between jobs. May have quit one and looking for another Could be trying to find employment after graduation

from high school or college.Cyclical – people who are not working

because firms do not need their labor due to lack of demand or downturn in business cycle. People aren’t buying goods & services, workers are

laid off.

Structural unemployment – mismatch between job seeker and job opening. Unemployed people lack skills or do not have sufficient education are structurally unemployed.

Click on Start on your computer.Click on My Computer.Click on Public on BCHS 2Click on Squires CoursewareClick on Economics.Open the Document GDP Links.

Click on the links and read.Click on the Document GDP.

Click on the link and answer the questions in the Word document by reading the article.

Dollar value on all goods and services produced in the United States.

It’s an indicator of economic performance.Includes these areas:

Consumption (consumer spending) Investments (business and individuals) Government Spending (includes government buying

products from businesses in the product market) Exports and Imports

Equation: GDP=C+I+G+(X-M)Statistics are kept for many years and

comparisons are made.

Financial transactionsBuying stocks and bondsServices one does for oneself (barber

cutting own hair; government payments to individuals)

Used to calculate inflation.Consumer price index is a means of

comparing prices of goods and services from one year to another.

The beginning year is called the base year.

Includes over 200 categories of products/services.

Standard says you are to know how to construct a CPI.

Current Year cost/Base year cost x 100Multiplying the answer by 100 converts it

to a number that is easy to compare to the base year.

The base year always has an index of 100.

Year 1 (Base Year)

Year 2

Basic Market Basket Item

No. of Units

Price Per Unit

Cost of Market Basket

Price Per Unit

Cost of Market Basket

Eggs 2 doz. .89 1.78 1.50 3.00

Boots 2 pair $40.00 80.00 50.00 100.00

Gasoline 10 gals. 2.25 $22.50 $3.50 35.00

Total Expenditure

104.28 138.00

Year 1 (Base year) 104.28/104.28=1*100= 100

Year 2 138.00/104.28=1.32*100=132

The change between the two years stated as a percentage is known as inflation rate. What’s the percentage increase between year 2 and

year 1? (132-100)/100=32% Increase (Inflation rate)

Increase in the price of goods and services.

Acceptable rate of inflation is between 1.5% and 2.5%.

To calculate the rate of inflation, use the CPI measures of years and compare them.

Current year – Base Year/Base Year *100 = inflation rate percentage.