Ch. 13 measuring The Economy

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Ch. 13 measuring The Economy af Mind Map: Ch. 13 measuring The Economy

1. 13.2 How Do Economists Measure the Size of an Economy?

1.1. #1 Key Point: Gross Domestic Product is the main Measure of a nations economy.

1.2. #2 Key Point: Economists can use GDP By telling the difference between years to see if the economy has grown or not.

1.3. #3 Key Point: Economists also adjust for population by using Per Capita by using GDP to compare the economies of individual countries

1.4. #1 Term: GDP- An economic indicator that measures a country’s total economic output

1.5. #2 Term: Normal GDP- measures the output of an economy valued at today’s prices, or in current dollars

2. 13.3 What Does the Unemployment Rate Tell Us About an Economy’s Health?

2.1. #1 Key point: If there is no unemployment rate than our economy is extremely terrible because all of the jobs are taken and everyone would be working. If all jobs are taken then eventually people who are searching for jobs will not get one.

2.2. #2 Key Point: There are Four measures of unemployment that are used to describe how or why the unemployment rate is: Frictional, Structural, Seasonal, and Cyclical

2.3. #3 Key Point: The Unemployment rate can also be very inaccurate because at any point of time people could just stop looking for a job.

2.4. #1 Term: Unemployment Rate- the percentage of the labor force that is seeking work

2.5. #2 Term: Natural Rate of Unemployment- When an economy reaches full employment, jobs exist for everyone who wants to work, even though a certain percentage of those jobs and workers will not yet have been matched together

3. 13.4 What Does the Inflation Rate Reveal About an Economy’s Health?

3.1. #1 Key Point: If the Inflation rate increase a lot it shows that the economy is growing and prices start to increase.

3.2. #2 Key Point: The the Inflation Rate decreases the economy goes through a deflation where the prices on everything decrease and people are willing to go buy more things.

3.3. #3 Key Point: The government can use inflation rate and see if the economy isn't doing so well they could some how regulate prices and eventually better the economy.

3.4. #1 Term: Real Cost of Living- the nominal cost of basic goods and services, adjusted for inflation

3.5. #2 Term: Deflation- Occurs when prices go down after a over time.

4. 13.5 How Does the Business Cycle Relate to Economic Health?

4.1. #1 Key Point: Business cycles are irregular in both length and severity. Which makes peaks and troughs hard to predict.

4.2. #2 Key Point: Business cycles are popularly known as periods of boom and bust that can help economist understand when the economy is bad or when it is doing great.

4.3. #3 Key Point: Recession will last a long time and cause serious damage to the economy. Most economist hope that it will never happen

4.4. #1 Term: Expansion- a period of economic growth.

4.5. #2 Term: contraction- period of general economic decline marked by a falling GDP and rising unemployment