2. Outline presentation
Overview of Economic Indicators
Macroeconomic Variables
• GDP (Gross Domestic Product)
• Types of GDP (Nominal, Real)
• CPI (Consumer Price Index)
• Unemployment Rate
• Balance of Payments
• Interest Rates and money supply
• Investment
• International Trade: Connecting Economies
3. Overview of Economic Indicators
• Economic indicators serve as crucial signals for understanding the health
and direction of an economy. By measuring various aspects of
macroeconomic performance or variable and stability, these indicators
provide valuable insights for economists, policymakers, businesses, and
individuals alike.
4. What is Gross Domestic Product (GDP)?
DEFINITION 🌍
• GDP measures the total value of
goods and services produced
within a country over a specific
period.
INDICATOR OF GROWTH 📈
GDP is a crucial indicator of
economic growth and productivity,
reflecting the overall health of an
economy.
5. GDP: Components 🔧
GDP encompasses consumer spending, government expenditure,
investments, and net exports.
6. Types of GDP (Nominal, Real)
• Nominal Gross Domestic Product (GDP) and Real GDP both quantify the
total value of all goods produced in a country in a year. However, real
GDP is adjusted for inflation, while nominal GDP isn’t
7. Real GDP and nominal GDP
• A more reliable measure of economic production expresses values in terms of prices for
an arbitrary base year, currently 2005. GDP measured with constant prices is referred to
as real GDP
• When the total value of final goods and services is calculated using current prices, the
resulting GDP measure is referred to as nominal GDP.
8. Consumer price indexes (CPIs)
• Consumer price indexes (CPIs) are index numbers that measure changes in the prices of
goods and services purchased or otherwise acquired by households, which households
use directly, or indirectly, to satisfy their own needs and wants.
9. the Consumer Price Index (CPI)
MEASURING INFLATION 💸
• The CPI tracks changes in the prices of a
basket of goods and services that a
typical household purchases, allowing
for the assessment of inflation.
COST OF LIVING COMPARISON
🛒
• The CPI can be used to compare the cost
of living between different periods or
geographic regions.
10. Policy Implications 🏦
Central banks and policymakers use the CPI to adjust interest rates
and develop effective monetary policies.
11. Unemployment Rate
The unemployment rate is the percentage of people in the labour force who are
unemployed. Consequently, measuring the unemployment rate requires identifying who
is in the labour force. The labour force includes people who are either employed or
unemployed.
12. Unemployment Rate
MEASUREMENT OF JOBLESSNESS 🔍
The unemployment rate indicates the
percentage of the labor force that is
actively seeking employment but
currently unemployed.
ECONOMIC IMPACT 💼
A high unemployment rate can signal
economic weakness, while a low rate can
indicate to be highly successful job
market.
13. Factors Influencing Unemployment ⚙️
Economic cycles, labor market regulations, and technological
advancements contribute to changes in the unemployment rate.
14. Interest rate and money supply
Interest rates and the money supply both play crucial roles in shaping the economy.
Interest rates affect borrowing costs, consumer spending, and investment decisions. When
interest rates are low, it stimulates economic growth by encouraging borrowing and
spending. On the other hand, high interest rates can slow down the economy by making
borrowing more expensive.
15. Money supply
• The money supply refers to the total amount of money in circulation in the economy.
Changes in the money supply can have profound effects on inflation, economic activity,
and interest rates. Central banks use various monetary policy tools to manage the
money supply and influence interest rates. Understanding the relationship between
interest rates and the money supply is important for analyzing the overall health of the
economy and making informed financial decisions.
16. Investment
• Investment refers to the spending by businesses on capital goods like machinery and
equipment. It reflects business confidence and potential future growth.
• investment involves careful planning, analysis, and adaptation based on your personal
circumstances and financial goals. By understanding the key aspects and utilizing
available resources, you can make informed choices and potentially build wealth over
time.
17. Financial Investments
Investment in stocks, bonds, and
other financial instruments drive
liquidity and capital formation,
supporting economic
development. • Real Estate Investment
• Investments in real estate, including
housing and commercial properties,
have a significant impact on
economic activity and employment.
Business Investments
Businesses investing in technology,
infrastructure, and research contribute
to innovation, productivity, and long-
term economic growth.
Types of investment
18. Consumption
• Consumption measures the spending by households on goods and services. It indicates
the level of economic activity and consumer confidence.
19. Balance of Payments
• balance of Payments: Records all economic transactions between a country and the rest
of the world, highlighting trade balances and currency movements.
20. International Trade: Connecting Economies
• Trade Surplus or Deficit 🚢
• The BOT represents the difference between a country's exports and imports of goods and
services.
• Economic Competitiveness 🌍
• The BOT provides insights into a country's competitiveness in global markets and its ability
to sustain economic growth.
• Impact on Currency Strength 💱
• A trade surplus strengthens a country's currency, while a deficit weakens it due to the
increased demand for foreign currencies.
21. Summary
"Economic indicators like GDP, CPI, and unemployment rate
measure economic health. GDP comes in nominal and real forms,
while CPI tracks price changes. Unemployment rates reflect job
market status. Balance of payments and interest rates impact
economies. Investment, international trade, and money supply
connect and drive economic activities."
