Module 37
Unemployment & Economic Growth
This economics module helps students understand whether an economy is using its people well and whether output per person is growing over time.
Students calculate unemployment and labor-force participation, examine discouraged and underemployed workers, explain the engines of growth, and read the business cycle from recession through expansion.
Module At A Glance
Grade Levels:
9th - 12th
Est. Length:
1-2 Weeks (41 slides)
Activities:
8 Activites
Articles:
0 Articles
Languages:
English & Spanish
Curriculum Fit:
Math, Business, Economics, CTE, Social Studies
Standards Alignment:
CEE National Standards
Guiding Questions
- How do we know if an economy is using its people well and growing over time?
- How are the unemployment rate and labor-force participation rate calculated?
- Why can the official unemployment rate miss discouraged and underemployed workers?
- Why is unemployment never zero, even when an economy is at full employment?
- How do physical capital, human capital, technology, and institutions raise output per person?
- How can aging populations slow economic growth?
- How do recessions, troughs, expansions, and peaks form the business cycle?
- Why do unemployment and inflation behave differently across demand-driven and supply-driven recessions?
Enduring Understandings
- Employment and real GDP tend to move together, making jobs one of the clearest signs of how the economy is performing.
- The unemployment rate is useful but incomplete because it excludes discouraged workers and counts underemployed workers as employed.
- Even strong economies have a natural rate of unemployment because workers move between jobs and skills do not always match available work.
- Long-run growth in output per person comes from physical capital, human capital, technology, research, and secure property rights.
- Economies move through recessions and expansions, with unemployment rising in downturns and falling as output recovers.
- Demand-driven recessions usually cool inflation, while supply shocks can reduce output and raise prices at the same time.
Module Vocab & Key Topics
- Employment
- The number of people working in paid jobs, often used as a signal of how strongly an economy is performing.
- Unemployment
- A condition where people who want jobs and are actively looking for work cannot find employment.
- Labor Force
- People who are employed plus people who are unemployed and actively looking for work.
- Unemployment Rate
- The percentage of the labor force that is unemployed, calculated as unemployed workers divided by the labor force.
- Labor-Force Participation Rate
- The percentage of the working-age population that is either employed or actively looking for work.
- Discouraged Worker
- A person who wants a job but has stopped actively looking, so they are not counted in the official unemployment rate.
- Underemployed Worker
- A person working less than they want or in a job below their skill level, even though they are counted as employed.
- Natural Rate of Unemployment
- The baseline unemployment that remains even at full employment because workers change jobs and skill needs shift over time.
- Frictional Unemployment
- Short-term unemployment that occurs when workers are between jobs or newly entering the labor market.
- Structural Unemployment
- Unemployment caused by a mismatch between workers' skills or locations and the jobs employers need to fill.
- Full Employment
- An economic condition where most people who want work can find jobs, even though the natural rate of unemployment remains.
- Economic Growth
- An increase in an economy's production of goods and services over time, especially output per person.
- Output Per Person
- A measure of average production per person, used to connect economic growth with living standards.
- Physical Capital
- Produced tools, machines, factories, roads, and equipment that help workers produce more goods and services.
- Human Capital
- The education, training, skills, health, and experience that make workers more productive.
- Technology
- Knowledge, methods, and inventions that allow people and businesses to produce more efficiently.
- Research and Development
- Investment in creating new ideas, products, processes, or technologies that can raise productivity.
- Property Rights
- Rules that let people own, use, protect, and benefit from resources or inventions, creating incentives to invest.
- Business Cycle
- The recurring pattern of recession, trough, expansion, and peak in overall economic activity.
- Recession
- A broad decline in economic activity where real GDP falls and unemployment usually rises.
- Expansion
- A period when economic activity increases, real GDP rises, and unemployment usually falls.
- Peak
- The high point of a business cycle before economic activity begins to decline.
- Trough
- The low point of a business cycle before economic activity begins to recover.
- Demand-Side Recession
- A downturn caused by households, businesses, or governments buying less, reducing sales, output, and hiring.
- Supply Shock
- A sudden disruption that makes production harder or more expensive, such as a pandemic shutdown or oil-price spike.
- Inflation
- A general rise in prices that reduces purchasing power and can behave differently depending on what caused a recession.
