Unit 4 student

UNIT 4: Measuring the Macroeconomy The Business Cycle & Economic Indicators such as GDP, Unemployment, & Inflation

WHAT IS MACROECONOMICS? -study of the workings of the economy as a whole

How do we assess our economy’s health? We examine economic indicators – data/statistics gathered about an economy

Economic Indicator #1: Gross Domestic Product

GDP – The Measure of National Output ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

The Output-Expenditure Model ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Adjusting GDP ,[object Object],[object Object],[object Object],[object Object]

Real vs. Nominal GDP ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Other Income Measures ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Economic Indicator #2: Inflation

Inflation Rate ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Price Index ,[object Object],[object Object],[object Object],[object Object]

How can you calculate a price index and track inflation? ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Calculations… Remember…in 2008 the market basket was valued at $14 … in 2009 the market basket was valued at $19 1. If the base year is 2008, what is the price index of 2009? Price Index = (New Year Price / Base Year Price) X 100 2. What is the inflation rate for 2009? Inflation Rate = { (New Year Price – Base Year) / Base Year Price } X 100

What is a price index used for? ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Severity of Inflation ,[object Object],[object Object],[object Object],[object Object],[object Object]

Causes of Inflation ,[object Object],[object Object],[object Object],[object Object],[object Object]

What are the COSTS of INFLATION? ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Economic Indicator #3: Unemployment

Unemployment ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Problems with the Rate ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

[object Object],[object Object],[object Object],[object Object],[object Object]

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Full Employment (also called Natural Rate of Unemployment) ,[object Object],[object Object],[object Object],[object Object]

http://www.econedlink.org/unemployment/

Business Cycles – Measuring Our Nation’s Economy Through Real GDP Changes

Phases of the Business Cycle ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Highest level of employment would be at the peak

How do we predict these cycles? ,[object Object],[object Object]

Other economic indicators ,[object Object],[object Object],[object Object],[object Object]

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Other Economic Problems ,[object Object],[object Object],[object Object]

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