Transcript Unemployment Rate = Number of Unemployed / Total Labor Force

Economic Indicators:Measuring the
Health of the Economy
Economist use a variety of tools to
measure the health of an economy
Can you name any?
GDP vs GNP
GNP – the total value of goods and services produced in
a given year (-includes production outside the country)
- GNP = GDP + NR (net income abroad)
GDP – Gross Domestic Product – Total worth of a
country’s production within a given year (total production
inside a country)
- GDP = C+I+G+(X-M) Personal Consumption +
Investments + Government Purchases + (exports –
imports)
C, G, I, (exports – imports)
C – Personal Consumption
G – Government Purchases
I – Investments
(E – M) – exports – imports
Write examples of each:
Final vs Intermediate Goods
Economists only count final goods to avoid
double counting
A final good is a product in its final form
- example a desk
An intermediate good is a good used to
make a final product – example: wood and
metal to make the desk
The Flow of Product vs The
Earnings and Cost Approach
These are ways of counting the value of goods
and services – both give the same answer
The Flow of Product – by counting all the money
spent by the buyers of goods and services; Ex –
A chair cost 50$, buyer adds to the GDP
Earnings and Cost – by counting all the money
received by those who produce the goods and
services; Ex – The same chair – 20$ in lumber,
5$ to the paint store owner, 5$ for wear and tear
of tools used, and 20$ for the labor
Unemployment Rate
The unemployment rate measures the percentage of
employable people in a country's workforce who are over
the age of 16 and who have either lost their jobs or have
unsuccessfully sought jobs in the last month and are still
actively seeking work.
- A healthy economy will have a 4% unemployment rate
Unemployment Rate = Number of Unemployed / Total
Labor Force
Is the unemployment rate an accurate indicator?
Inflation Rate
Simply- this is the rate at which products
and prices rise compared to the value of
money
Ex. Demand can increase price and so
can the money suppy
Does GDP Indicate Good Health of
a Nation?
Make a list of things we talked about in
class that indicate an unhealthy nation.