Chapter 13

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Chapter 13 by Mind Map: Chapter 13

1. Measuring the size of the economy

1.1. The main measure of the economy is the GDP

1.1.1. GDP- Gross Domestic Product

1.2. The GDP is the market value of all final goods and services produced in a country within a given period of time.

1.3. Economists calculate GDP by measuring expenditures on goods and services produced in a country.

1.4. Studies have shown that countries with a higher GDP have a higher education rate.

1.5. GDP is not only used to measure how big an economy is, but if it is growing or shrinking and at which rate.

2. Inflation rate and the economy's health

2.1. Economist at the BLS track changes in the cost of living using the consumer price index. Consumer price index measures the average change in price of a type of good over time.

2.2. The real cost of living allows economists to calculate the real cost of goods and services.

2.3. In the start of 1913 the average annual rate of inflation has been about 3.2% and for much of that period the rate has varied. The spending that makes up GDP comes from households, businesses, government, and foreign buyers.

2.3.1. Included

2.3.2. Included

2.3.3. Excluded

3. Unemployment rate and the economy's health

3.1. The unemployment rate helps indicate the health of the economy. With the government measuring unemployment every month, the BLS reports a total number of people who are unemployed to the previous month.

3.1.1. Project specifications

3.1.2. End User requirements

3.1.3. Action points sign-off

3.2. One problem with unemployment is that at any time a number of unemployed people have given up looking for work.

3.2.1. Define actions as necessary

3.3. Natural rate of unemployment is a certain percentage of workers and jobs that have not been matched yet.

4. The business cycle and economic health

4.1. Expansion is a period of economic growth. The recurring period of growth and decline in economic activity that all economies experience.

4.2. Business cycles are irregular in both length and severity which makes peaks and troughs difficult to predict.

4.3. Business cycles are popularly known as periods of boom and bust or even recovery, upturn, upswing, or period of prosperity.

4.3.1. Boom is the expansion phase of the cycle.