Introducing Concepts - Unemployment and Inflation - Video Tutorials & Practice Problems
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Unemployment
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Alright now I want to introduce two more key concepts for this course that are interrelated unemployment and inflation. So we're gonna talk about them on kind of a high level here, we're just introducing them, but we're gonna go into a lot more detail on both of these topics in later videos. Okay. But here we're just gonna go over the definitions and some key trends related to these uh these two topics. So let's start here with unemployment. What is unemployment? Well obviously it's when people don't have a job, right? But what is our specific definition? It's what when a person is willing to work actively searching for a job but cannot find a job, right? So they're willing and actively searching for a job that's different than someone who's like oh yeah, I'd get a job but you know, I'm just gonna watch some soap operas instead, you know? Yeah yeah yeah, I'll get a job mom, Don't worry, I'm gonna get a job mom gonna get a job, don't worry. Alright, so unemployment were actively searching for work but cannot find a job. So let's look at this trend in our graph here when we talk about the unemployment rate over time. So what we have here, what we've shaded in purple, these purple sections, these are recessions in the economy. Okay, And generally when, when when you get shown a graph like this in a macro economics class, generally they're gonna show you the recession's, they'll do something like this, where they'll highlight in a different color, where the recessions are happening and what do you see happening as a trend throughout all of these recessions, Look what we have as these recessions are happening, What's happening to the unemployment rate, the amount of the percentage of people that are unemployed, right? So notice throughout all of these recessions what is happening to unemployment it is increasing, Right? So the unemployment rate tends to increase during recessions and that should sort of sort of make logical sense. Right? When we talk about, oh no the economy is going through a recession, you know, bad things are happening in the economy. Well, guess what? People can't find jobs that's exactly uh a main definition and a key flag to finding that we're in a recession is that these unemployment rates are increasing. Cool. But notice that even when the recession ended we still had some changes in unemployment that we're still kind of going up. But we have certain rules that mark what a recession is when it starts and ends and we see that it does start to recover and the unemployment does generally decrease outside of the recession. Right. Cool. So um obviously when we talk about unemployment it sounds like a bad thing but why is it a bad thing? Well it's undesirable because when people are unemployed, a nation is not using its most important resource and that is the skills of the citizens. The actual work power of the citizens if they can't find jobs. Well they're not gonna be able to produce anything and it's bad for the nation's economy, right? So the most important resource there is the skill of the citizens putting the citizens to work and when they can't find jobs. Obviously that's not good for the economy. Cool, So let's pause real quick and then we'll discuss a related uh topic of inflation. Let's check it out.