Transcript Indicators Power Point

Economic Indicators
Signs of Economic Growth or Decline
Economics
❖ The
science that deals with the
production, distribution, and
consumption of goods and
services, or the material welfare
of humankind.
Economic Indicators
❖ The
strength or weakness of an
economy is often measured by
“economic indicators” - pieces of data
that relate whether the economy is
expanding or contracting
Gross Domestic Product
❖ The
total value of goods and services
produced in a country
❖ “per
capita” = “for each head” = per
person
❖ Is
an indicator of a country’s standard of
living
Examples of GDP
Rank by
IMF
2015 GDP per
capita (in U.S. $)
CIA
Factbook
Rank
18,558,130
1
55,800
19
China
11,383,030
2
14,100
113
Brazil
1,534,780
9
15,600
103
Switzerland
651,770
19
58,600
16
Zimbabwe
14,659
114
2,100
202
Country
2015 Total GDP
United States
(in millions of U.S. dollars)
Unemployment Rate
❖
According to the U.S.Bureau of Labor Statistics: Persons
are classified as unemployed if they do not have a job, have
actively looked for work in the prior 4 weeks, and are currently
available for work. Persons who were not working and were
waiting to be recalled to a job from which they had been
temporarily laid off are also included as unemployed. You can
Receive benefits from the Unemployment Insurance (UI) program
July 2014 – 6.2%
❖
U.S.
❖
Ohio June 2011 - 8.8% July 2014 – 5.7%
❖
Unemployment Rate Graph
June 2011 - 9.1%
July 2016 – 4.9%
July 2016 – 4.8%
Inflation
❖
Inflation measures the value of a country’s currency over
time
❖
Usually a measure of the RISE in prices for goods or
services
❖
Let’s try it! Calculate Inflation Rates
Inflation
❖
The Federal Reserve
Board will try to curb
inflation by limiting the
amount of money that is
circulating in the
economy.
❖
When too much money is
in circulation, the value of
each bill will decrease,
thus costing MORE to
purchase goods.
Interest Rates
❖
An “interest rate” is the percentage at which a loan is
repaid to the lender
❖
For example, when people get a mortgage (loan for a
house) they pay the bank the total amount borrowed
PLUS a percentage of the total mortgage amount
Interest Rates
❖
The Federal Reserve also influences interest rates
❖
The Federal Reserve is the “banker’s bank” - it lends
money to banks at a “discount rate” = interest rate for
banks
❖
When the discount rate is lowered, banks can offer
customers lower interest rates and still make a profit
❖
This usually provides an economic “boost”
Consumer Price Index (CPI)
❖
a measure of the average change over time in the prices paid by urban
consumers for a market basket of consumer goods and services.
❖
Whose buying habits does the CPI reflect?
The CPI reflects spending
patterns for each of two population groups: all urban consumers and urban
wage earners and clerical workers. The all urban consumer group
represents about 87 percent of the total U.S. population. It is based on the
expenditures of almost all residents of urban or metropolitan areas, including
professionals, the self-employed, the poor, the unemployed, and retired
people, as well as urban wage earners and clerical workers. Not included in
the CPI are the spending patterns of people living in rural nonmetropolitan
areas, farm families, people in the Armed Forces, and those in institutions,
such as prisons and mental hospitals. Consumer inflation for all urban
consumers is measured by two indexes, namely, the Consumer Price Index
for All Urban Consumers (CPI-U) and the Chained Consumer Price Index for
All Urban Consumers (C-CPI-U). (from www.bls.gov)
❖
Let’s Look at the CPI!
Housing Data
❖
A final economic
indicator is “housing
data;” it includes the
following:
❖
1) foreclosure rates
❖
2) new construction
❖
3) real estate transfers
The Business Cycle
❖
Fluctuation of
business activity
experienced in an
economy over a
period of time
❖
The periodic “peaks
and valleys” of various
economic indicators
❖
Indicative of the
overall health of the
economy
❖
Video clip explaining
key ideas