1. 13.3- What does the unemployment rate tell us about an economy's health?
1.1. The main economic cost of high unemployment is lost potential output. The smaller the number of people who are working, the fewer goods and services the economy can generate.
1.2. Unemployed workers also pay a serious economic cost. They and their families lose income and the goods and services that income would have purchased. They may become unable to pay their monthly mortgage, leading to the loss of a home. Unemployment can also mean the loss of medical benefits, which then become an added expense.
1.3. Unemployed workers no longer contribute income taxes to the government. In fact, many begin taking money from the government in the form of unemployment insurance and other benefits.
1.4. unemployment rate: the percentage of the labor force that is not employed but is actively seeking work
1.5. natural rate of unemployment: the percentage of the labor force without work when the economy is at full employment; a condition in which the economy is strong and there is no cyclical unemployment
2. 13.4- What Does the Inflation Rate Reveal About an Economy’s Health?
2.1. The BLS tracks inflation by gathering information on Americans’ cost of living. That is, it studies the cost of buying the goods and services that households like yours purchase every day. As you would expect, the cost of living changes all the time because prices do not stay the same.
2.2. Changes in the average prices of these items approximate the change in the overall cost of living. For that reason, the CPI is sometimes called the cost-of-living index. As such, it serves as the primary measure of inflation in the United States.
2.3. The Economic Costs of Inflation are loss of purchasing power, loss of economic efficiency, and higher interest rates.
2.4. inflation rate: the percentage increase in the average price level of goods and services from one month or year to the next
2.5. consumer price index : (CPI)a measure of price changes in consumer goods and services over time; the CPI shows changes in the cost of living from year to year
3. 13.5- How Does the Business Cycle Relate to Economic Health?
3.1. 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.
3.2. Economists categorize the indicators they use to track the business cycle based on whether they signal a future change, an ongoing change, or a change that has already begun.
3.3. Consumers typically react to higher prices and higher interest rates by cutting back on spending. As sales slow, businesses begin to see profits fall and inventories rise.
3.4. business cycle: a recurring pattern of growth and decline in economic activity over time.
3.5. inventory: merchandise that companies or stores have on hand
4. 13.2- How do economist measure the size of an economy?
4.1. 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.
4.2. Economists calculate GDP using this formula: C + I + G + NX = GDP
4.3. GDP still matters. As a country’s per capita GDP increases, so too do other indicators of well-being, such as literacy rate, education, health, life expectancy, and standard of living.
4.4. gross domestic product: the market value of all final goods and services produced within a country during a given period of time
4.5. per capita GDP: a nation’s real GDP divided by its population; a measure of average economic output per person
4.7. This article is describing how economist use the GDP to predict future growth and development. In the article it is talking about how economist are looking at the third quarter of this year and how the GDP grew with the annual rate of 2.1 percent up from the 1.5 percent they projected. They can now use these projections to predict future months.
