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. The main way to measure the size of a nations economy is by looking at its gross domestic product, or GDP.

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

1.3. Economists also use GDP to tell if an economy is growing or shrinking.

1.4. As GDP increases so does the over all well being of the people participating in that economy.

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

2.1. High unemployment rate is an indicator of a poor economy.

2.2. There are four types of unemployment, structural, frictional, seasonal, and cyclical.

2.3. There will never be an economy that does not have some sort of unemployment, there are always people in between jobs.

2.4. High unemployment hurts an economy over all.

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

3.1. The United States has creeping inflation, the annual rate of inflation has risen 3.2% roughly every year since 1913.

3.2. Hyperinflation can happen to an economy, this creates uncertainty in the currency being used in that country, an example is Germany in the 1920's.

3.3. There is also such thing as deflation, this is when the inflation number is negative.

3.4. Inflation creates a loss of purchasing power, however creeping inflation is nothing to worry about, for now.

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

4.1. There are four phases of the business cycle, expansion, peak, contraction, trough.

4.2. Business cycles are nearly impossible to predict, so economists have a hard time to predict when the economy will peak, or be in a trough.

4.3. There are booms and busts in the economy. This has been happened in the United States, the 1920's were booming times, 1929 is when the country went into a recession (bust), and the 1950's were boom times again.

4.4. So overall the business cycle can help economists decide on what is currently happening to the economy so necessary actions can be taken to manage it.

5. 10 Terms