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AP Economics

AP Economics. Mr. Bernstein Module 12: The Meaning and Calculation of Unemployment February 19, 2014. AP Economics Mr. Bernstein. The Meaning and Calculation of Unemployment Objectives - Understand each of the following: How unemployment is measured

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AP Economics

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  1. AP Economics Mr. Bernstein Module 12: The Meaning and Calculation of Unemployment February 19, 2014

  2. AP EconomicsMr. Bernstein The Meaning and Calculation of Unemployment • Objectives - Understand each of the following: • How unemployment is measured • How the unemployment rate is calculated • The significance of the unemployment rate for the economy • The relationship between the unemployment rate and economic growth

  3. AP EconomicsMr. Bernstein

  4. AP EconomicsMr. Bernstein

  5. AP EconomicsMr. Bernstein Defining and Measuring Unemployment • BLS produces statistics: http://www.bls.gov/bls/unemployment.htm • The population is divided into three groups: Working at least one hour (Employed), not working but seeking work (Unemployed) and those “not in the labor force” • Labor Force LF = Employed + Unemployed • Labor Force Participation Rate LFPR = 100 * LF / (civilian population 16 or older) • Unemployment Rate UR = 100 * # Unemployed / # Labor Force

  6. AP EconomicsMr. Bernstein Significance of the Unemployment Rate • Indicator of the Ebb and Flow of the Macroeconomy (Circular Flow) • Can understate true unemployment • Reduced hours • Underemployment • Discouraged workers (not in labor force) • Affects different groups disproportionally

  7. AP EconomicsMr. Bernstein Unemployment and Growth • What is relationship between GDP and UR? • Consider Recessions, Expansions • GDP can be negative. How low can UR go?

  8. AP EconomicsMr. Bernstein Unemployment and Growth • GDP rises when UR falls

  9. AP EconomicsMr. Bernstein Unemployment and Growth • UR rises when GDP falls

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