Download Economic Indicators


Economic Indicators
Essential Questions:
Why does government
intervene in the economy?
How does government
know when to intervene?
Key Terms
 Pre-assess your knowledge of Key
Terms #26-38—K, H, N on the left.
 Define Key Term #30 only.
 Homework tonight is to define the
others from today’s notes.
Warm-Up: A Letter from a
Young Woman
Read the letter to yourself…and then,
discuss it with a partner, and answer the
questions in the top part of your notes…
 What does the letter reveal about this woman’s life?
 During what time period was this letter written? How do you
know?
 What do you think was happening to consumer spending and
business during the Great Depression? To people’s jobs? To
prices and wages?
 What details can you share about the health of the US
economy during the Great Depression?
Modern-Day Connection
 Click the image to watch the video
Economic Indicators
 Economies have times of health and
sickness.
 Economic indicators: statistics that help
economists judge the
health of economies.
How Do Economists
Measure the Size of an Economy?
 Gross Domestic Product (GDP)
 Per Capita GDP
 Consumer Price Index (CPI)
 Unemployment
 Inflation
 Deflation
What is GDP?
 Gross Domestic Product (GDP): The market
value of all final goods and services
produced within a country during a given
period of time
It is the measure of a country’s total output
The main measure of the size of a nation’s
economy
GDP Definition Breakdown…
 The market value…—the price
consumers are willing to pay for a
good or service in a competitive
marketplace.
 …of all final goods and services…—any
legal good or service that is ready for
use by consumers (not intermediate
goods like steel, grain, etc.)
GDP Definition Breakdown…
 …produced within a country…—goods
and services made within its borders
(but not necessarily a U.S. company-Ex. Toyota)
 …during a given period of time…the
Bureau of Economic Analysis
calculates GDP every quarter (3
months)
Calculating GDP
 GDP Video Clip
What is Per Capital GDP?
 Per Capita: per person
 Per Capita GDP: a nations real GDP divided
by its population.
 A good measure of a society’s standard of
living
Per Capita GDP Example
 2011 US GDP
$14.4 trillion
 What is the US per
capita GDP?
 2011 Norway GDP
$492 billion
 What is the Norway
per capita GDP?
 Which has a higher
standard of living?
What is
Consumer Price Index (CPI)?
 Consumer Price Index (CPI): A measure of
price changes in consumer goods and
services.
 It shows changes in the cost of
living over time.
 Sometimes called “cost-of-living index”
 Serves as the main measure of inflation
Consumer Price Index (CPI)
 The Bureau of Labor & Statistics surveys
thousands of households and researches
retail prices monthly.
 Using this data, they track changes over
between two periods (Oct. 2008-Oct. 2009)
 Example: A 2% increase in the CPI from Oct.
to Oct. would indicate a 2% rate of inflation.
What is Unemployment?
 Unemployment rate: The percentage of the
labor force that is not employed, but is
actively seeking work.
 Like GDP and CPI, it is
an indicator of an
economy’s health.
Unemployment Types
 Frictional unemployment: People “between
jobs” and looking for for the “right job”
Example: people who
have left one job to look
for another, or are
looking for their first job
Unemployment Types
 Structural unemployment: Loss of jobs due
to technology creating a decrease in demand
for their skills
Examples: Travel agent,
VCR repair
 Causes hardships, but is overall good for an
economy—technological progress
Unemployment Types
 Seasonal unemployment: Loss of jobs due
to the time of year
Examples: tourism,
holidays, construction, agriculture
 Cyclical unemployment: Loss of jobs during
a period of economic decline
Example: Dot-com web development in
early 2000s
Economic Indicators
Gallery Walk
 Visit each of the four visuals- Examine each and answer the
related questions about GDP,
unemployment, inflation and the
business cycle during the
depression.
Complete the Handout to turn it in.
Exit Ticket—Comprehension Check
Answer each question On Your Own Paper—
1. What does GDP stand for?
2. How is GDP calculated?
3. What kinds of goods and services ARE included in GDP?
4. What are the 4 types of unemployment?
5. In your own words, which of these economic indicators
is the BEST indicator of an economy’s health? WHY?
What is Inflation?
 Inflation: an increase in the overall price level
of goods/services produced in an economy.
 Germany after WWI is a prime example of an
unhealthy economy.
 Forced to pay war reparations at the end of
the war in 1918, Germany’s economy printed
more money. The result was hyperinflation
(Click me!)
What is Inflation?
 Demand-pull inflation: inflation caused by
a “pull” on prices—consumers demand
more goods/services than an economy can
produce, driving prices up
 Cost-push inflation: inflation caused by a
“push” on prices—rising cost of production
causes prices to rise
 Video Clip
What is Deflation?
 Deflation: the opposite of inflation, fall in
the price of goods or services
 Good news for consumers and savers.
-The value of saved $ will increase as
prices fall
 Bad news for businesses.
-Price drops result in decreased demand
as they wait for prices to drop more.
Collaborative Practice
 Draw your number—You will work
your group of 3-4 students.
 Each group will get 3 pieces of
construction paper, highlighters
(blue, green, yellow, and pink),
scissors, and glue sticks.

STEP 1: Setting Up the “Puzzle”
Boards
At the top of each piece of paper, label each economy’s
puzzle— “Puzzle for Economy A,” etc.
 Glue each of the economy’s descriptions to their “board.”
 Cut each of the puzzle pieces and sort them (photos, GDP
graphs, unemployment graphs, and inflation graphs) and set
them to the side.
 Below each economy’s description, use the highlighters to
create 4 boxes slightly larger than each of the puzzle pieces.
Blue
Green
Yellow
Pink
STEP 2: Examine the Economies
 Read each economy’s description. Information from
each will match up to one of the each of the economic
indicators provided.
 Highlight the information from each description
related to each of the indicators. For example,
highlighting the text in
the description related to
GDP green.
 DO NOT glue the pieces until you have agreed and are
sure they have sorted correctly according to the
information in the description.
STEP 3: You’re the Economist…
OYOP—USING COMPLETE SENTENCES, ANSWER EACH
Analyze each of the 3 economies and answer the
following questions:
1) Identify one way the government intervened in
each economy.
2) Based on the information you examined, which
economy would you say is the “healthiest?”
Provide at least 2 pieces of information from
the data provided to justify your answer.
EXIT TICKET—Comprehension Check
 On your own paper, use complete sentences to answer
the following questions:
1. What does GDP stand for? How is it calculated?
2. What kinds of goods are NOT used in calculating GDP?
3. What kinds of goods and services are used to calculate CPI?
4. What are the 4 types of unemployment?
5. In your opinion, which of these is the BEST indicator of an
economy’s health AND WHY?