Chapter 13 Measuring the Economy

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Chapter 13 Measuring the Economy by Mind Map: Chapter 13 Measuring the Economy

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

1.1. They use the GDP to see if the Economy is growing or shrinking.

1.2. They also use the GDP to compare economies of other countries.

1.3. They split the economy in 4 sections and use those for sections to calculate the GDP

1.4. Gross domestic product (GDP): The market value of all final goods and services produced within a country during a given period of time.

1.5. Nominal GDP: a measure of a country’s economic output (GDP) valued in current dollars; nominal GDP does not reflect the effects of inflation

2. 13.3 What Does the Unemployment Rate Tell Us About an Economy’s Health?

2.1. The BLS is a government agency that collects and analyzes economic data. This agency determines the unemployment rate the percentage of the labor force that is seeking work.

2.2. Like the GDP, the unemployment rate is a useful indicator of the health of an economy.

2.3. A high unemployment rate means the overall health of the economy is poor.

2.4. Unemployment rate: The percentage of the labor force that is not employed but is actively seeking work

2.5. Frictional unemployment: A type of unemployment that results when workers are seeking their first job or have left one job and are seeking another

3. 13.4 What Does the Inflation Rate Reveal About an Economy’s Health?

3.1. Loss of purchasing power- Changes how much your money is worth.

3.2. Higher Interest Rates- Higher real rates also economic growth.

3.3. Loss of economic efficiency- The price is going up and down and it scares people so they stop buying and selling which creates even more inflation.

3.4. Deflation: A fall in the price of goods and services; the opposite of inflation

3.5. Inflation rate: The percentage increase in the average price level of goods and services from one month or year to the next

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

4.1. Leading indicators- They predict the rise and fall of the business cycle.

4.2. Lagging indicators- Tells when one phase ends in the cycle and a new one begins.

4.3. Coincident indicators- The expansions and contraction happen at the same time as business cycles

4.4. Business cycle: A recurring pattern of growth and decline in economic activity over time

4.5. Contraction: A period of general economic decline marked by falling GDP and rising unemployment

5. http://www.economist.com/blogs/freeexchange/2014/12/measuring-economic-development

5.1. I picked this article because its explains well about the economy and how you can measure it. It explains some of the events are economy went through and how it works and all that.