Economic Indicators- Unit 5 Econ

Economic Indicators

Evaluate the performance of an economy based on GDP, unemployment rate, and inflation rate.

GDP (Gross Domestic Product)

The total value of all goods and services produced within a country in a given period.

GDP Analysis

Economists analyze GDP to understand economic growth and performance.

Expansion

When businesses are growing and producing more goods and services; unemployment decreases.

Contraction

When businesses slow down and produce less; unemployment increases.

Nominal GDP

GDP measured at current prices without adjusting for inflation.

Real GDP

GDP adjusted for inflation; shows the economy's true growth.

Inflation

A general increase in prices of goods and services over time.

Deflation

A general decrease in prices of goods and services over time.

Unemployment Rate

The percentage of the labor force that is unemployed and actively looking for work.

Types of Unemployment

Includes frictional, structural, cyclical, and seasonal unemployment.

Frictional Unemployment

When people are temporarily between jobs or entering the labor force for the first time.

Structural Unemployment

When workers' skills do not match available jobs.

Cyclical Unemployment

Caused by economic downturns or recessions.

Seasonal Unemployment

Caused by changes in seasons and demand for certain jobs.

Business Cycle

The recurring pattern of growth and decline in economic activity over time.

Phases of the Business Cycle

Expansion → Peak → Contraction → Trough.

Peak

Growth slows, risk for inflation.

Trough

Economy bottoms out, Recovery begins.