Economic Performance and Labor

6 economic indicators

1) gdp and gnp growth, 2) population and poverty, 3) unemployment, 4) business cycle, 5) inflation, 6) stock market

gdp

Gross Domestic Product- the total market value of all final goods and services produced annually in an economy

4 limitations of gdp

1) non monetary exchanges, 2) inflation, 3) externalities, 4) income pattern

4 parts of business cycle

expansion, peak, contraction, trough

Recession vs. Depression

Recession is a prolonged economic contraction where a depression is a prolonged recession that is long and severe

4-5 gov't changes after the great depression

1) the new deal - more jobs and infrastructure, 2) social security, 3) banking reforms - insures bank deposits, 4) securities regulations - protected stock market and investors, 5) agriculture adjustment - stabilized agricultural prices, etc

Inflation

a general increase in prices and fall in the purchasing value of money.

inflation equation

100% x (CPI2-CPI1)/CPI1

Deflation

A situation in which prices are declining

Disinflation

a reduction in the rate of inflation

CPI

(consumer price index) a measure of the overall cost of the goods and services bought by a typical consumer

cost-push inflation

when oil price goes up, cost for groceries goes up due to shipping

demand-pull inflation

during covid, masks and hand sanitizer spiked in price due to demand

wage-price spiral

higher prices force workers to ask for higher wages. Higher wages lead to even higher prices... (cost-push)

excessive monetary growth

when the money supply grows faster than real GDP

3 effects of inflation on the economy

1) increase in cost of living 2) decrease in purchasing power 3) workers demand higher wages which increases costs of goods and services

unemployment rate in wi and usa

wi - 2.9% usa - 4.1%

full employment %

when unemployment is at its natural rate

labor force vs unemployed

all people over 16 that are unemployed or employed vs. looking for work in the last 4 weeks, but not currently working

frictional unemployment

caused by workers changing jobs or getting new ones

structural unemployment

caused by changes in economy that reduces the demand for some workers

cyclical unemployment

caused by changes in business cycle

seasonal unemployment

caused by changes in weather or holidays

how is the stock market an economic indicator

because it reflects investors expectations about the future performance of the economy

how do labor unions help and hurt the economy

better wages and working conditions, but they protect bad workers and require fees, etc.

minimum wage vs. living wage

Minimum wage - lowest wage permitted by law

Living wage - minimum income necessary to meet the basic needs of living