Tracking the US Economy

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Tracking the US Economy by Mind Map: Tracking the US Economy

1. Leakages & Injections

1.1. Leakages

1.1.1. Any diversion of income from spending

1.2. Injection

1.2.1. Spending or income from sources other than earnings

1.3. Leakages = Injection

2. 2 ways to measure GDP

2.1. Income approach

2.2. Expenditure approach

3. Circular flow model

4. Gross Domestic Product (GDP)

4.1. What is GDP?

4.1.1. Market value of all final goods and services produced during a year

4.1.2. Produced by resources located in the US

4.2. Limitations

4.2.1. Production not included Do-it-yourself Ex: child care, house cleaning, laundry, home maintenance Underground economy Unreported economic activities

4.2.2. Ignores negative externalities

4.2.3. Ignores depletion of natural resources

4.3. What's not included

4.3.1. Intermediate goods

5. Accounting for price changes

5.1. Nominal GDP

5.1.1. GDP based on prices at the time of production

5.2. Real GDP

5.2.1. GDP adjusted for inflation

5.3. Price indexes

5.3.1. Consumer Prie Index (CPI) Unit of measure based on the cost of a fixed market basket of goods & services