Ch. 13 Mind Map

1. 13.4

1.1. Inflation can run a country into a tailspin and can ultimately destroy a country's economy. Germany after the second world war was a great example of this.

1.2. Economists track changes in the price of living for consumers using what is known as the consumer price index.

2. 13.5

3. 13.2

3.1. GDP: This is an economic indicator that measures a countries total economic output.

3.2. How GDP is Calculated: First economists divide into four sections; households, businesses, government, and foreign trade. Each sector's spending makes up one of the four components; household consumption, business investments, government purchases, and the net of exports minus imports.

3.3. Adjusting for Inflation: This is viewed by looking at Nominal and Real GDP.

3.4. How GDP Growth Helps People: Studies show that countries with a high per capita GDP have higher levels of education. The literacy rate is at or near 100% for countries with high GDP.

4. 13.3

4.1. Members of the labor force are classified as people that are actively employed. The unemployed are people seeking a job, but not currently working. Those who are not looking for a job or working are not part of the labor force.

4.2. Four types of unemployed: Frictional, Structural, Seasonal, and Cyclical

4.3. We will never be able to be 100% accurate on the unemployment rate due to the underground economy dealing with illegal sales, people that have given up looking for a job, and involuntary part-time workers

4.4. The main economic cost of high unemployment is lost potential output