Inflation and Unemployment

Why would an unemployed person work a job for no pay?

What is a product or service everyone uses?

Warm-up

Today I will be able to analyze inflation and unemployment in the United States by constructing a short response.

Content Objective

Measures changes in prices over timeConsumer Price Index

364 goods and services- The BasketWhat’s a good product or service for the

CPI?Base years- 1982-1984

Price Index

* FOOD AND BEVERAGES (breakfast cereal, milk, coffee, chicken, wine, full service meals, snacks)

Price Index

* FOOD AND BEVERAGES (breakfast cereal, milk, coffee, chicken, wine, full service meals, snacks)* HOUSING (rent of primary residence, owners' equivalent rent, fuel oil, bedroom furniture)

Price Index

* FOOD AND BEVERAGES (breakfast cereal, milk, coffee, chicken, wine, full service meals, snacks)* HOUSING (rent of primary residence, owners' equivalent rent, fuel oil, bedroom furniture)* APPAREL (men's shirts and sweaters, women's dresses, jewelry)

Price Index

* FOOD AND BEVERAGES (breakfast cereal, milk, coffee, chicken, wine, full service meals, snacks)* HOUSING (rent of primary residence, owners' equivalent rent, fuel oil, bedroom furniture)* APPAREL (men's shirts and sweaters, women's dresses, jewelry)* TRANSPORTATION (new vehicles, airline fares, gasoline, motor vehicle insurance)

Price Index

* FOOD AND BEVERAGES (breakfast cereal, milk, coffee, chicken, wine, full service meals, snacks)* HOUSING (rent of primary residence, owners' equivalent rent, fuel oil, bedroom furniture)* APPAREL (men's shirts and sweaters, women's dresses, jewelry)* TRANSPORTATION (new vehicles, airline fares, gasoline, motor vehicle insurance)* MEDICAL CARE (prescription drugs and medical supplies, physicians' services, eyeglasses and eye care, hospital services)*

Price Index

* FOOD AND BEVERAGES (breakfast cereal, milk, coffee, chicken, wine, full service meals, snacks)* HOUSING (rent of primary residence, owners' equivalent rent, fuel oil, bedroom furniture)* APPAREL (men's shirts and sweaters, women's dresses, jewelry)* TRANSPORTATION (new vehicles, airline fares, gasoline, motor vehicle insurance)* MEDICAL CARE (prescription drugs and medical supplies, physicians' services, eyeglasses and eye care, hospital services)* RECREATION (televisions, toys, pets and pet products, sports equipment, admissions);*

Price Index

* FOOD AND BEVERAGES (breakfast cereal, milk, coffee, chicken, wine, full service meals, snacks)* HOUSING (rent of primary residence, owners' equivalent rent, fuel oil, bedroom furniture)* APPAREL (men's shirts and sweaters, women's dresses, jewelry)* TRANSPORTATION (new vehicles, airline fares, gasoline, motor vehicle insurance)* MEDICAL CARE (prescription drugs and medical supplies, physicians' services, eyeglasses and eye care, hospital services)* RECREATION (televisions, toys, pets and pet products, sports equipment, admissions);* EDUCATION AND COMMUNICATION (college tuition, postage, telephone services, computer software and accessories);

Price Index

* FOOD AND BEVERAGES (breakfast cereal, milk, coffee, chicken, wine, full service meals, snacks)* HOUSING (rent of primary residence, owners' equivalent rent, fuel oil, bedroom furniture)* APPAREL (men's shirts and sweaters, women's dresses, jewelry)* TRANSPORTATION (new vehicles, airline fares, gasoline, motor vehicle insurance)* MEDICAL CARE (prescription drugs and medical supplies, physicians' services, eyeglasses and eye care, hospital services)* RECREATION (televisions, toys, pets and pet products, sports equipment, admissions);* EDUCATION AND COMMUNICATION (college tuition, postage, telephone services, computer software and accessories);* OTHER GOODS AND SERVICES (tobacco and smoking products, haircuts and other personal services, funeral expenses).

Price Index

CPI= Market basket/by base year average

Inflation= change in CPI from previous year

Price Index and Inflation

Inflation- 1951

In times of prolonged inflation, who suffers more? Creditors or debtors? Why?

High-level Thinking Question

Labor force- all persons 16 and older who are either employed or actively seeking employment. 154,000,000.Excludes military and incarcerated

Unemployed- all persons seeking work. worked <1hr., family business <15

hrs

Unemployment

Unemployed / labor forceUnemployment Rate

Frictional- workers between jobsSources of Unemployment

Frictional- workers between jobsStructural- fundamental change in tastes or how business is done.Outsourcing

Sources of Unemployment

Frictional- workers between jobsStructural- fundamental change in tastes or how business is done.Outsourcing

Technological- machines replace workers

Sources of Unemployment

Frictional- workers between jobsStructural- fundamental change in tastes or how business is done.Outsourcing

Technological- machines replace workers

Cyclical- swings in the business cycle

Sources of Unemployment

Frictional- workers between jobsStructural- fundamental change in tastes or how business is done.Outsourcing

Technological- machines replace workers

Cyclical- swings in the business cycle

Seasonal- centers around weather

Sources of Unemployment

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