Download Economic Indicators Notes File

Economic Indicators
Gross Domestic Product
•
Gross Domestic Product (GDP) is the value, expressed in dollars, of all _____________________
produced in a year.
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The production of these goods and services provides __________ for people in the economy.
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The income people earn is then used to __________________________ goods and services.
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_____________________________ are the goods and services sold to consumers.
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Intermediate goods are things that are produced and then ______________________________
of other goods and services.
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For example, the denim produced in mills is used in the production of jeans.
–
In this example, denim is an _______________________________ good and the jeans
are a _________________ good.
•
On your paper…
•
Make a list of all of the final goods and services you used from the time you woke up yesterday
until you went to bed last night. Items should not be listed more than once.
•
Be sure to include final goods easily overlooked.
–
For example, how was breakfast prepared? (Microwave, toaster, refrigerator) Did you
turn on the light in the bathroom to shower? (electricity) Did you use soap, shampoo,
toothbrush, and toothpaste?
Consumption
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Spending by households is called _________________________________ or consumer spending
because the products provide direct satisfaction to consumers.
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When we measure GDP, consumer spending represents the ______________________ category
–
Consumer spending makes up over _________________________ of the GDP.
Durable and Nondurable Goods
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Durable goods refers to consumer goods that will last __________________________________
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Nondurable goods includes consumer goods expected to last ____________________________
Consumer Price Index
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The Consumer Price Index (CPI) measures the change in the _____________________________
of a variety of consumer goods and services.
•
Consumer Price Index is measured by first creating a ___________________________________
of thousands of items purchased by consumers -–
Such as food, housing, clothing, transportation, medical care, recreation, education,
communication, and energy.
•
The prices of the specified products are measured each month, and the
______________________________________________________________________________
is reported as the Consumer Price Index.
•
The Consumer Price Index generally _______________________ during economic ___________
–
During economic decline, the rate of price increase ______________ or prices may even
______________
Industrial Production
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Industrial Production measures the output of American __________________________
•
Industrial Production is measured by calculating the manufacturing output in the consumer
goods, business equipment, construction supplies, materials, manufacturing, mining, and utility
industries.
•
Production is calculated in each sector monthly, and the percentage change in output is
reported as Industrial Production.
•
Durable goods, such as cars, appliances, and furniture, as well as construction supplies, tend to
be _________________________ to economic changes than are other manufacturing products.
•
Generally, Industrial Production increases during economic _________________ and falls during
periods of economic ____________________.
Interest Rates
•
Interest rate is the _______________________________________ that you have to pay back on
something.
–
•
A 10% interest rate means you have to pay back what you owe, plus 10% more
A decline in interest rates can lead to more __________________________ in order to promote
economic growth;
–
High interest rates can lead to lower levels of investment and a decline in the rate of
growth
Non-farm Payroll
•
The Non-farm Payroll measures the number of people employed by
____________________________________________________________________________
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Non-farm Payroll generally rises during economic ________________________ and falls during
economic _________________________.
Unemployment
•
Unemployment surveys are conducted once a __________
•
The Unemployment Rate measures the percentage of people in the labor force who __________
working during the week of the survey
–
•
The Department of Labor Bureau of Labor Statistics surveys thousands of Americans each month
to calculate the size of the ______________________________
–
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But they had looked for work within the previous ___________________________
The Labor Force consists of those ARE working plus those that ARE NOT working, but
seeking work
The unemployment rate is calculated via the number of _______________________________
divided by the total _______________________________
Demand
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Periods of economic growth are often fueled by ______________________________________
for economic products.
–
This increased demand often causes _________ to increase, while simultaneously
causing ______________ to go up.
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Firms increase their production to meet that increased demand, and often hire additional
workers, increasing the payroll and reducing the _______________________________________
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The increased demand for products can also result in increased demand for ________________
to purchase products, increasing ________________________________________
•
Recessions, on the other hand, are often fueled by a _______________________ in demand for
goods and services.
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Firms reduce production in response, lowering ______________________________________
–
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Production cutbacks lead firms to lay off workers, increasing the ___________________
Reduced demand for loans can result in ____________________ interest rates, and the Federal
Reserve may further reduce interest rates in an attempt to stimulate ______________________
in the economy
1. Explain what Real Gross Domestic Product growth statistics measure.
2. Explain what Consumer Price Index statistics measure.
3. Explain what Industrial Production statistics measure.
4. Explain what Interest Rate statistics measure.
5. Explain what Change in Non-farm payroll statistics measure.
6. Explain what Unemployment Rate statistics measure.
7. How does knowledge of these statistics help us to understand how the economy is doing?