Ch. 13 Measuring the Economy

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Ch. 13 Measuring the Economy by Mind Map: Ch. 13 Measuring the Economy

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

1.1. The main measure of the size of a nation's economy is its gross domestic product. GDP is an economic indicator that measures a country's total economic output

1.1.1. net exports—the value of all exports minus all imports

1.2. Economists typically calculate GDP by measuring expenitures on goods and services produced in a country.They divide the economy into four sectors. Household,business,government,and foreign trade. Each sector's spending makes up on of the four components of GDP: household consumption (C),bussiness investment (I),government purchases (G), and the net of the exports minus imports (NX) C+I+G+NX=GDP

1.2.1. gross domestic product is the market value of all final goods and services produced within a country during a given period of time

1.3. Economists use GDP figures to determine not only how big an economy is but whether it is growing or shrinking and at what rate

1.3.1. http://www.economist.com/blogs/freeexchange/2014/12/measuring-economic-developmen

1.3.1.1. This article has to do with this question how do economists measure the economy? basically this article is trying to say how rich we really are but of the measurements they have found in the economy

2. 13,3 What Does the Unemployment rate tell us about an economy's health?

2.1. Like the GDP, the unemployment rate is a useful indicator of the health of an economy. I generak a high unemployment rate mean the overall health ofthe economy is poor

2.1.1. unemployment rate—the percentage of the labor force that is seeking wor

2.2. Every month, the BLS reports the total number of people who were unemployed for the previous monthEvery month, the BLS reports the total number of people who were unemployed for the previous mont

2.3. Based on the interview data, the BLS classifies those who are eligible as employed, unemployed, or not in the labor force

2.3.1. Structural unemployment comes about mainly when advances in technology reduce the demand for certain skills

3. 13,4 What does the inflation rate reveal about an economy's health

3.1. The real cost of living is the nominal cost of basic goods and services, adjusted for inflatio

3.1.1. real cost of living is the nominal cost of basic goods and services, adjusted for inflatio

3.2. Consumers pay nominal costs with nominal wages, or wages based on current prices. As prices go up, wages generally go up as well. By using the CPI to adjust for inflation, economists can calculate real wages and compare them over time.

3.2.1. consumer price index (CPI) is a price index for a “market basket” of consumer goods and services

3.3. On rare occasions, a recession will last a long time and cause serious damage to the economy. Economists refer to this kind of severe contraction as a depression

4. 13.5 How does the business cycle relate to economic health?

4.1. . Measures that consistently rise or fall several months before an expansion or a contraction begins are called leading economic indicators

4.2. The BLS tracks inflation by gathering information on Americans’ cost of living.

4.2.1. business cycle implies that expansions and contractions occur at regular, predictable interval

4.3. Business cycles are irregular in both length and severity. This makes peaks and troughs difficult to predict. Nonetheless, economists attempt to do just that, using a variety of economic indicators

4.3.1. Inventory is merchandise that companies or stores have on hand