One of a series of teaching units designed to introduce secondary students to the Canadian economy, this handbook contains instructional materials on unemployment and inflation. Material is divided into nine sections. Section 1 covers historical trends in unemployment and inflation. Section 2 examines four types of unemployment: frictional, structural, deficient demand, and search. Section 3 presents methods of measuring and defining unemployment. Section 4 deals with measuring the unemployment rate. Sections 5 and 6 focus on types and causes of inflation and examine supply side economic theories, the demand-pull theory, and supply and demand theories. Section 7 outlines methods of measuring inflation. The final two sections discuss myths and misconceptions about inflation, including the effect of inflation on borrowers and the effect of inflation on the standard of living. Each section follows a uniform format: a brief introductory reading on a specific issue or topic is followed by one or more activities. A section summary and answer key are provided where applicable. (LP)