macro: econ indicators
macroeconomics
the study of economics as a whole
*are we doing better or worse?
economic indicators
gross domestic product (GDP) —> best indicator
unemployment rate —> inversely related to GDP (as GDP increases, unemployment rate should decrease)
consumer price index (CPI)
sales —> new products (production)
stock market —> worst indicator
gross domestic product (GDP)
the dollar amount of goods, services, and structures produced within a country’s national borders in one year
goods: pizza being produced in a pizza restaurant
services: jobs, nurses
structures: homes, warehouses
*excluded:
second hand sales (they were already counted when they were new)
antiques, used items
underground market (illegal things cannot be considered legitimate in the economy)
illegal drugs, guns, gambling
intermediate products — parts of a whole (cannot double dip because parts were already counted for when bought separately)
tires on a car, sugar in a cake
non-market transactions (quite impossible to keep track of the money exchanged)
babysitting, lawn mowing
PROS: most inclusive (indicates if people are better off from year to year)
*most important economic statistic there is
CONS: quality of life (because there is more production and more money being spent, does not mean people are happy and the nation is thriving — "money doesn’t buy happiness”) and inflation (GDP would go up but production remains the same)
inflation
a rise in price level of goods, services, and structures - change in price over a long period of time
about 3-4% this year in USA
*this changes the GDP since things cost more, but people are not necessarily buying more
when the economy is doing well, CPI goes up
consumer price index (CPI)
the overall change in prices over a short period of time
slight change
recession
when the GDP goes down for six or more months
obama after 9/11 (2008) —> didn’t call it a recession but it was one
unemployment rate
the percentage of unemployed workers in the total labor force
want it to go down
revenue
income for the year (new money coming in)
ex. paycheck
*in usa, the number 1 government revenue is income tax
expenditures
money spent in a year
ex. bills, rent
*in usa, social security, healthcare, defense
federal budget
total revenue and expenditures within a nation in a year
usa’s number 1 expenditure is social security
*people are living longer and there are more people (boomers)
deficit
when the expenditures are more than the revenue in a year
deficit gets added to the national debt every year
*had a deficit every year since 9/11
surplus
when the revenue is more than the expenditures
clinton had a surplus
instead of paying debt, he gave 400 bucks to every homeowner (homeowners check)
debt vs. deficit
debt is the TOTAL of all deficit in the country’s history
deficit is debt from ONE YEAR
federal reserve board
people in charge of the federal budget
*chairperson —> jerome powell
macroeconomics
the study of economics as a whole
*are we doing better or worse?
economic indicators
gross domestic product (GDP) —> best indicator
unemployment rate —> inversely related to GDP (as GDP increases, unemployment rate should decrease)
consumer price index (CPI)
sales —> new products (production)
stock market —> worst indicator
gross domestic product (GDP)
the dollar amount of goods, services, and structures produced within a country’s national borders in one year
goods: pizza being produced in a pizza restaurant
services: jobs, nurses
structures: homes, warehouses
*excluded:
second hand sales (they were already counted when they were new)
antiques, used items
underground market (illegal things cannot be considered legitimate in the economy)
illegal drugs, guns, gambling
intermediate products — parts of a whole (cannot double dip because parts were already counted for when bought separately)
tires on a car, sugar in a cake
non-market transactions (quite impossible to keep track of the money exchanged)
babysitting, lawn mowing
PROS: most inclusive (indicates if people are better off from year to year)
*most important economic statistic there is
CONS: quality of life (because there is more production and more money being spent, does not mean people are happy and the nation is thriving — "money doesn’t buy happiness”) and inflation (GDP would go up but production remains the same)
inflation
a rise in price level of goods, services, and structures - change in price over a long period of time
about 3-4% this year in USA
*this changes the GDP since things cost more, but people are not necessarily buying more
when the economy is doing well, CPI goes up
consumer price index (CPI)
the overall change in prices over a short period of time
slight change
recession
when the GDP goes down for six or more months
obama after 9/11 (2008) —> didn’t call it a recession but it was one
unemployment rate
the percentage of unemployed workers in the total labor force
want it to go down
revenue
income for the year (new money coming in)
ex. paycheck
*in usa, the number 1 government revenue is income tax
expenditures
money spent in a year
ex. bills, rent
*in usa, social security, healthcare, defense
federal budget
total revenue and expenditures within a nation in a year
usa’s number 1 expenditure is social security
*people are living longer and there are more people (boomers)
deficit
when the expenditures are more than the revenue in a year
deficit gets added to the national debt every year
*had a deficit every year since 9/11
surplus
when the revenue is more than the expenditures
clinton had a surplus
instead of paying debt, he gave 400 bucks to every homeowner (homeowners check)
debt vs. deficit
debt is the TOTAL of all deficit in the country’s history
deficit is debt from ONE YEAR
federal reserve board
people in charge of the federal budget
*chairperson —> jerome powell
