1. 13.2- How do Economists Measure the Size of an Economy?
1.1. Economists use GDP figures to determine not only how big an economy is, but whether it is growing or shrinking, and at what rate it is doing so.
1.2. A steadily growing GDP is generally considered a sign of economic health.
1.3. As a country's per capita GDP increases, so do other indicators of well-being, such as literacy and education, health and life expectancy, and the standard of living.
1.4. Market Value: the price buyers are willing to pay for a good or service in a competitive market
1.5. Gross Domestic Product: The market value of all final goods and services produced within a country during a given period of time
1.6. Net Exports: The value of all exports minus all imports.
2. 13.3- What Does the Unemployment Rate Tell Us About an Economy's Health?
2.1. 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
2.2. Economists identify four types of unemployment frictional, structural, seasonal, and cyclical.
2.3. Some people will always be out of work, even in an economy with full employment.
2.4. Unemployment rate: the percentage of the labor force that is not employed but is actively seeking work
2.5. underground economy: a sector of the economy based on illegal activities; such as drug dealing and unlawful gambling
2.6. Frictional Unemployment: a type of unemployment that results when workers are seeking their first job or have left one job and are seeking another.
3. 13.4- What Does the Inflation Rate Reveal About an Economy's Health?
3.1. Runaway inflation can send an economy into immediate chaos.
3.2. The consumer price index (CPI) serves as the primary measure of inflation in the United States.
3.3. BLS can track the change in the CPI between any two periods. An example of this is when CPI raises 1.4% during a 12 month period, meaning the inflation rate for that year as 1.4%.
3.4. Inflation Rate: the percentage increase in the average price level of goods and services from one month or year to the next.
3.5. Consumer Price Index: (CPI) is 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.
3.6. Nominal Wages: wage level based on current dollars
4. 13.5- How Does the Business Cycle Relate to Economic Health?
4.1. Measures that consistently rise or fall several months before an expansion or contraction begins are called leading economic indicators, which ones used to forecast the peak and trough of a business.
4.2. The recurring periods of growth and decline in economic activity that all economies experience is called the business cycle. The four phases of the business cycle are expansion, peak, contraction, and trough.
4.3. negative shock to the economy such as rapidly rising oil prices, a terrorist attack, or a stock market crash, a rise in interest rates, which makes it harder for consumers and firms to borrow money, and shortages of raw materials which can cause price increases are all obstacles that cause an economy to fall into recession, which occurs during the contraction/trough stages of the business cycle.
4.4. Trough: the lowest point of a contraction, or period of economic decline; a trough is followed by economic growth.
4.5. Recession: a period of declining national economic activity, usually measured as a decrease in GDP for at least two consecutive quarters (six months).
4.6. Inventory: merchandise that companies or stores have on hand.
