Chpt. 13 Measuring the Economy

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

1. 13.2 How do Economists Measure the Economy?

1.1. 13.2 ( key points)

1.1.1. 1.)The main measure of the size of a nation's economy is its gross domestic product. 2.) As a country's per capita GDP increases, so too do other indicators of well-being. 3.)Gross domestic product is a useful tool for measuring economic growth. But as a measure of the overall health of an economy, GDP has several limitations. Gross Domestic Product- An economic indicator that measures a country's total economic output.

2. 13.3 What does the unemployment rate tell us about an Economy's health?

2.1. 13.3 (key points)

2.1.1. Like the GDP, the unemployment rate is a useful indicator of the health of an economy. In general, a high unemployment rate means the overall health of the economy is poor. Every month, the BLS reports the total number of people who were unemployed for the previous month. By examining a small but representative sample of the population, the BLS can gauge how many people in the entire population are unemployed. BLS-does not attempt to count every job seeker in the country. Instead, it conducts a sample survey each month.

2.1.2. Unemployment rate-the percentage of the labor force that is seeking work

3. 13.4 What does the inflation rate reveal about an Economy's health?

3.1. 13.4 (key points)

3.1.1. The German experience was proof, if any was needed, that runaway inflation can send an economy into a tailspin. That is why economists keep a close eye on a third economic indicator: the inflation rate. The price a person pays for a pair of shoes or any other product is its nominal cost. 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. Nominal cost- Items cost in curent dollars.

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

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

4.1. 13.5 (key points)

4.1.1. The business cycle consists of four phases. These phases include a period of growth and a period of decline, as well as the turning points that mark the shift from one period to the next . 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. Business cycles are popularly known as periods of boom and bust. A boom is the expansion phase of the cycle.

4.1.2. Business cycle-Economies are always changing. Wheelan is referring to the recurring periods of growth and decline in economic activity that all economies experience.