Chapter 13: Measuring the Economy

1. 13.2: How do Economists Measure the Size of an Economy?

1.1. GDP: The market value of all final goods and services produced within a country during a given period of time. Market Value:The price buyers are willing to pay for a good or service in a competitive market.

1.2. Economist measure the the Economy through GDP They calculate our economy by using consumer spending, business investment, government purchases, and net exports minus imports. They can use GDP to compare the economies of individual countries.

2. 13.3: What Does the Unemployment Rate tell us about an Economy's Health?

2.1. Unemployment Rate: The percentage of the labor force that is not employed but is actively seeking work. Discouraged Workers: Unemployed workers who have ceased to look for work and are not a part of the labor force.

2.2. The Unemployment can tell us how many people we have in the labor force. They amount of people working reflects how the economy is. It can show us how efficiently we are using our resources. High unemployment is costly for society. When people don't work they aren't contribute income taxes to the community.

3. 13.4: What Does the Inflation Rate Reveal about an Economy's Health?

3.1. Inflation Rate: The percentage increase in the average price level of goods and services form one month or year to the next. Consumer Price Index: A measure of price changes in consumer goods and services over time.

3.2. If things cost to much people won't spend as much and they will save their money. This will cause less money to be in the system. Inflation can cause us to go into a depression. The purchasing power of your dollars go down and you can't buy as much.

4. 13.5: How Does the Business Cycle Relate to Economic Health?

4.1. Recession: A period of declining national economic activity Depression: A prolonged economic downturn characterized by plunging real GDP and extremely high unemployment.

4.2. During expansion and peak the economy is growing doing well. During Contraction the GDP starts to fall and unemployment starts to rise. During Trough is like the Peak. it will be the turning point in the economy and start its rise back up to a health economy.

4.3. http://www.investopedia.com/terms/b/businesscycle.asp

4.3.1. In this article is explains in depth how the business cycle works and what it does to the economy.