Econicrackers unit 4 - measuring the economy

Gross Domestic Product

The total value of goods and services produced within the borders of a country during a specific time period.

Real GDP

GDP without factoring inflation

GDP per capita

GDP/population

final goods

goods and services that have been purchased for final use and not for resale or further processing or manufacturing

intermediate goods

products used in the production of final goods

GDP doesn't account for ____

income inequality

GDP cannot show ____

quality of life, income distribution

employed

worked for 1 paid hour. 15 hours with family buisness, vacation, sick days

unemployed

have not looked for work in past 4 weeks.

labor force

employed + unemployed

unemployment rate formula

number of unemployed/labor force x 100

frictional unemployment

unemployment that occurs when people take time to find a job

structural unemployment

unemployment that results because the number of jobs available in some labor markets is insufficient to provide a job for everyone who wants one

seasonal unemployment

unemployment that occurs as a result of harvest schedules or vacations, or when industries slow or shut down for a season

cyclical unemployment

unemployment that rises during economic downturns and falls when the economy improves

expansion

A period of economic growth as measured by a rise in real GDP

peak

the height of an economic expansion, when real GDP stops rising

contraction

a period of economic decline marked by falling real GDP

Trough

a turning point in the business cycle when the contraction phase ends and the expansion phase begins

Inflation

A general and progressive increase in prices

Inflation formula

change in price/starting price x 100

Hyperinflation

A very rapid rise in the price level; an extremely high rate of inflation.

Deflation

A situation in which prices are declining

demand-pull inflation

inflation that is caused by an increase in aggregate demand

cost-push inflation

rising prices as a result of rising production costs

wage-price spiral

the process by which rising wages cause higher prices, and higher prices cause higher wages

market basket

a hypothetical set of consumer purchases of goods and services

price index

a measurement that shows how the average price of a standard group of goods changes over time

Base Year (Period)

year used as a point of comparison for other years in a series of statistics

Consumer Price Index (CPI)

a measure of the overall cost of the goods and services bought by a typical consumer

CPI formula

100 x (cost of basket in current year/cost of basket in base year)

price change formula

100 x (change in CPI/base CPI)

labor force participation rate formula

# unemployed + # employed/ adult population X 100