Unit 2 - Economic Indicators & Business Cycle
Unit 2 Module 10:
➔
Gross Domestic Product (GDP)
: a measure of the overall
value of goods and services
produced
➔
Measures like
GDP
and
price
indexes
play a central
role in the formulation of economic
policy
➔
The National Accounts
◆
Most countries calculate a set of numbers known as
national income
and
product
accounts
(
aka national accounts
)
●
National accounts
: keep track of the flows of money
among different
sectors of the economy.
Ex. spending of customers,
sales of producers,
business investment spending , government purchases, etc.
◆
Circular Flow Model:
Unit 2 Module 12:
➔
Employed
: people who are currently holding a job in
the economy, either full time or part
time
➔
Unemployed
: jobless, looking for jobs, and available
for work
◆
Unemployment rate rises during recessions and falls during expansions
●
# of unemployed works / labor force * 100
●
U.S Census Bureau interviews a random sample of 60,000 American
families monthly
➔
Labor force
: sum of the employed and unemployed
◆
Labor force participation rate = labor force / population age 16+ * 100
➔
Unemployment Rate can understate the true level of unemployment because some
groups of people are considered unemployed
◆
Discouraged
workers
: nonworking people who are capable
of working but have
given up looking for a job due to the state of the job market
◆
Marginally attached workers
: would like to be employed
and have been looking for
a job in the recent past but are not currently looking for a job
◆
Underemployed
: workers who would like to work more
hours or who are
overqualified for their jobs
➔
Growth & Unemployment
◆
If real GDP is falling → unemployment is rising
●
GDP is rising at a below average rate → economy isn’t in a recession but
unemployment is rising → called a
growth recession
◆
Strong negative relationship between growth in economy and rate of
unemployment
Unit 2 Module 13:
Unit 2 Module 10:
➔
Gross Domestic Product (GDP)
: a measure of the overall
value of goods and services
produced
➔
Measures like
GDP
and
price
indexes
play a central
role in the formulation of economic
policy
➔
The National Accounts
◆
Most countries calculate a set of numbers known as
national income
and
product
accounts
(
aka national accounts
)
●
National accounts
: keep track of the flows of money
among different
sectors of the economy.
Ex. spending of customers,
sales of producers,
business investment spending , government purchases, etc.
◆
Circular Flow Model:
Unit 2 Module 12:
➔
Employed
: people who are currently holding a job in
the economy, either full time or part
time
➔
Unemployed
: jobless, looking for jobs, and available
for work
◆
Unemployment rate rises during recessions and falls during expansions
●
# of unemployed works / labor force * 100
●
U.S Census Bureau interviews a random sample of 60,000 American
families monthly
➔
Labor force
: sum of the employed and unemployed
◆
Labor force participation rate = labor force / population age 16+ * 100
➔
Unemployment Rate can understate the true level of unemployment because some
groups of people are considered unemployed
◆
Discouraged
workers
: nonworking people who are capable
of working but have
given up looking for a job due to the state of the job market
◆
Marginally attached workers
: would like to be employed
and have been looking for
a job in the recent past but are not currently looking for a job
◆
Underemployed
: workers who would like to work more
hours or who are
overqualified for their jobs
➔
Growth & Unemployment
◆
If real GDP is falling → unemployment is rising
●
GDP is rising at a below average rate → economy isn’t in a recession but
unemployment is rising → called a
growth recession
◆
Strong negative relationship between growth in economy and rate of
unemployment
Unit 2 Module 13:
