Chapter 13 measuring the Economy.

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Chapter 13 measuring the Economy. by Mind Map: Chapter 13 measuring the Economy.

1. 3:Business cycles are popularly known as periods of boom and bust. A boom is the expansion phase of the cycle., 4:ut inevitably, boom turns to bust. The bust, or contract-ion phase of the business cycle, is also called a downturn, a downswing, or a recession

2. 1: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,2.The business cycle consists of four phases, Expansion,Peak, Contraction,Trough.

3. 13.2-How do economists measure the size of an economy

3.1. 1: the main measure of the size of a nation is its Gross Domestic Product. 2: 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.

3.2. 3:Economists typically calculate GDP by measuring expenditures on goods and services produced in a country. They divide the economy into four sectors: households, businesses, government, and foreign trade. Each sector's spending makes up one of the four components of GDP, 4:

4. 13.3-What Does the Unemployment Rate Tell Us About an Economy’s Health

4.1. 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., 2: Everyone who is eligible to be in the labor force but is neither working nor looking for work is classified as not in the labor force.

4.2. 3:In determining how many of the country's more than 315 million people are unemployed, the BLS makes every effort to be accurate. Still, critics point to several problems that may make the results less than exact.4:The main economic cost of high unemployment is lost potential output.

5. 13.4- What Does the Inflation Rate Reveal About an Economy’s Health

5.1. 1:Economists at the BLS track changes in the cost of living using what is known as the consumer price index. 2:The real cost of living can then be used to compare prices over time

5.2. 3:The BLS relies on the consumer price index to estimate the level of inflation in the United States each month. However, critics point to several biases that may distort the CPI, making the reported inflation rate less than accurate. 4: Because the CPI measures the price changes of a fixed list of goods, it does not take into account consumers' ability to substitute goods in response to price changes,Over time, technological advances may improve the quality or add to the lifetime of a product,

6. 13.5-How Does the Business Cycle Relate to Economic Health

7. Unemployment the state of being without work, but actively seeking work

8. Gross Domestic Product the market value of all final goods and services produced within a country during a given period of time

9. Poverty Rate the percentage of the population that has a family income below a government defined threshold

10. Income Redistribtion a policy designed to reduce income inequality by taking money from the rich and giving it to the poor

11. Consumer Price Index a measure of price changes in consumer goods and services over time; this measure shows changes in the cost of living from year to year

12. Deflation a fall in the price of goods and services

13. Unemployment Rate the percentage of the labor force that is not working, but is actively seeking work

14. Poverty Threshold the estimated minimum income needed to support a family, measured as a dollar value

15. Stagflation a combination of economic slowdown and inflation; features include slow or zero economic growth, high unemployment, and rising prices

16. Intermediate Good a good used in the production of a final good; these are not included in the calculation of GDP

17. Hyperinflation an extreme and rapid rise in the price of goods and services