Indicators of economic efficiency презентация

3 Key Economic indicators

Слайд 1How do we measure the health of our economy?
INDICATORS OF ECONOMIC

EFFICIENCY

Слайд 23 Key Economic indicators


Слайд 3Gross Domestic Product
market value of all final goods and services produced

within a country in a year

Final goods are purchased by the last user and will not be resold or used to produce anything else

GDP


Слайд 4Intermediate goods
Resources of any kind
Used goods
Ex: Used cars, purchase of an

older home, thrift store clothing, Craigslist, Ebay
Illegal goods/services
Ex: Drugs, theft etc.
Purely financial transactions
Ex: Investment in stocks or savings
Transfer Payments
Ex: Social Security, Food Stamps
Barter
Ex: Babysitting for yardwork

NOT COUNTED IN GDP



Слайд 5C: consumer spending
Daily spending on goods and services



I: business investment spending
Machinery,

factories, equipment etc.

4 COMPONENTS OF GDP


Слайд 6G: government spending
Spending by all levels of government - military, school,

highways, supplies etc.





NX: net export spending
Purchases of U.S. goods and services by foreign buyers (exports) minus purchases of foreign goods and services by U.S. consumers (imports)


Слайд 7Example:
In 2000, estimates in trillions of dollars

GPP = C + I

+ G + NX
$10.04 = $6.81 + $1.87 + $1.75 + ($1.13-$1.52)

GDP= C+I+G+NX


Слайд 8Unemployment Rate
Percentage of labor force who is not working

Labor Force: everyone

16 – 65 who is working or actively looking for work

3 types of unemployment

Unemployment


Слайд 9People are out of work temporarily
Seasonal work
Changing jobs
Looking for 1st job
This

is acceptable unemployment

FRICTIONAL


Слайд 10Unemployment because your job skills are no longer needed

Ex. Technology replaces

workers so people are laid off

People can go back to school and learn new skills

STRUCTURAL


Слайд 11People are unemployed due to fluctuations in the business cycle

As the

economy declines, people lose their jobs

Worst kind of unemployment, can not easily fix. Economy must recover first.

CYCLICAL


Слайд 12Consumer Price Index
Index of all goods and services produced in a

country
Measured by a market “basket” of all goods and services that are commonly bought year after year by the typical urban household

CPI


Слайд 13Inflation
Rising price levels
purchasing power of the dollar falls
Dollar buys less

Deflation
Falling price

levels
purchasing power of the dollar rises
Dollar buys more

EFFECTS OF CHANGING CPI



Слайд 14Hyperinflation: rapid inflation
ex. Germany after WWII

Stagflation: rising prices with falling GDP

and rising unemployment

Слайд 15As GDP rises, unemployment rates fall and prices begin to rise




As

GDP falls, unemployment rises and prices begin to decline

RELATIONSHIP BETWEEN GDP, UNEMPLOYMENT AND CPI







GDP

GDP

Prices

Unemployment

Unemployment

Prices


Слайд 164 STAGES OF THE BUSINESS CYCLE
Expansion
The 1st stage: when the economy

has economic growth

GDP is rising

Слайд 17BUSINESS CYCLE
Peak
2nd stage: GDP is at it’s maximum


Слайд 18BUSINESS CYCLE
Contraction
3rd stage: GDP is falling
6 months or more of a

contraction is called a recession

If the recession is bad enough, it is a depression


Слайд 19BUSINESS CYCLE
Trough
The bottom of the contraction where GDP stops falling


Слайд 20BUSINESS CYCLE – 4 STAGES
Expansion
Peak
Contraction
Trough


Слайд 21
Aggregate means “total”

Total demand for ALL FINAL goods and services in

the economy
from all people in the economy
for all prices levels

Aggregate Demand


Слайд 22Aggregate demand consists of:
consumer spending (C)

investment spending (I)

government spending (G)

net export spending (NX).



If any component increases, GDP increases, AD curve shifts right.
If any component decreases, GDP decreases, AD curve shifts left

COMPONENTS


Слайд 23High price level leads to lower quantity of aggregate demand
THE CURVE
P
AD
Q
P

stands for price levels in the economy

AD is aggregate demand – total demand for all final goods and services in the economy

Q is real GDP (output) of all final goods and services

Слайд 24Total production of ALL FINAL goods and services in the economy


from all poducers in the economy
for all prices levels

AGGREGATE SUPPLY


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