Chapter Measuring Economic Performance 12
GDP <ul><li>GDP  = Gross Domestic Product </li></ul><ul><li>Total output or production in the nation in a single year. </l...
 
Defining GDP <ul><li>Final Product  = total thing </li></ul><ul><li>Intermediate Goods  = parts  </li></ul><ul><li>Secondh...
GDP is Geographical not National <ul><li>US company in Mexico   Mexican company in US </li></ul>vs.
Other Measures <ul><li>GNP  =gross national product </li></ul><ul><li>NNP  =Net national product </li></ul><ul><li>NI  =Na...
 
Inflation <ul><li>A rise, over time, in the general level of prices. </li></ul><ul><li>Deflation  = a drop, over time, in ...
 
Measures of Inflation <ul><li>CPI  =Consumer Price Index </li></ul><ul><li>Market Basket  = common goods purchased by ever...
Business Cycle
 
Business Fluctuations <ul><li>“ What causes the economy to move up and down?” </li></ul><ul><li>5 main forces </li></ul><u...
Leading  Indicators:  CHANGE? <ul><li>Average weekly hours for production workers in manufacturing </li></ul><ul><li>Weekl...
Coincident Indicators :  STARTED? <ul><li>Number of nonagricultural workers who are employed </li></ul><ul><li>Personal in...
Lagging Indicators :  LENGTH? <ul><li>Average length of unemployment </li></ul><ul><li>Size of manufacturing and trade inv...
MAJOR ECONOMIC INDICATORS
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Econ Ch12 Measuring Economic Performance

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Econ Ch12 Measuring Economic Performance

  1. 1. Chapter Measuring Economic Performance 12
  2. 2. GDP <ul><li>GDP = Gross Domestic Product </li></ul><ul><li>Total output or production in the nation in a single year. </li></ul><ul><li>Dollar value of final goods & services produced. </li></ul><ul><li>Includes foreign companies in U.S. </li></ul>
  3. 4. Defining GDP <ul><li>Final Product = total thing </li></ul><ul><li>Intermediate Goods = parts </li></ul><ul><li>Secondhand Sales = used goods </li></ul><ul><li>Nonmarket Transaction = chores, volunteering, etc. </li></ul><ul><li>Underground Economy = illegal </li></ul>
  4. 5. GDP is Geographical not National <ul><li>US company in Mexico Mexican company in US </li></ul>vs.
  5. 6. Other Measures <ul><li>GNP =gross national product </li></ul><ul><li>NNP =Net national product </li></ul><ul><li>NI =National Income </li></ul><ul><li>PI =Personal Income </li></ul><ul><li>DPI =Disposable Personal Income </li></ul>
  6. 8. Inflation <ul><li>A rise, over time, in the general level of prices. </li></ul><ul><li>Deflation = a drop, over time, in the general level of prices. </li></ul>4%/Year $ 1,423 10 $ 1,369 9 $ 1,316 8 $ 1,265 7 $ 1,217 6 $ 1,170 5 $ 1,125 4 $ 1,082 3 $ 1,040 2 $ 1,000 1 $ Year
  7. 10. Measures of Inflation <ul><li>CPI =Consumer Price Index </li></ul><ul><li>Market Basket = common goods purchased by everyone, used for estimating CPI </li></ul><ul><li>PPI =Producer Price Index </li></ul><ul><li>Real GDP = GDP adjusted for inflation </li></ul>
  8. 11. Business Cycle
  9. 13. Business Fluctuations <ul><li>“ What causes the economy to move up and down?” </li></ul><ul><li>5 main forces </li></ul><ul><ul><li>Business Decisions </li></ul></ul><ul><ul><li>External Events </li></ul></ul><ul><ul><li>Innovation and Imitation </li></ul></ul><ul><ul><li>Government Policies </li></ul></ul><ul><ul><li>Psychological Factors </li></ul></ul>
  10. 14. Leading Indicators: CHANGE? <ul><li>Average weekly hours for production workers in manufacturing </li></ul><ul><li>Weekly initial claims for unemployment </li></ul><ul><li>New orders for consumer goods </li></ul><ul><li>Speed with which companies make deliveries (the busier a company, the longer it will take to fill orders) </li></ul><ul><li>Number of contracts and orders for plants and equipment </li></ul><ul><li>Number of building permits issued for private housing units </li></ul><ul><li>Stock prices </li></ul><ul><li>Changes in money supply in circulation </li></ul><ul><li>Changes in interest rates </li></ul><ul><li>Changes in consumer expectations </li></ul>
  11. 15. Coincident Indicators : STARTED? <ul><li>Number of nonagricultural workers who are employed </li></ul><ul><li>Personal income minus transfer payments </li></ul><ul><li>Rate of industrial production </li></ul><ul><li>Sales of manufacturers, wholesalers, and retailers </li></ul>
  12. 16. Lagging Indicators : LENGTH? <ul><li>Average length of unemployment </li></ul><ul><li>Size of manufacturing and trade inventories </li></ul><ul><li>Labor cost per unit of output in manufacturing </li></ul><ul><li>Average interest rate charged by banks to their best business customers </li></ul><ul><li>Number of commercial and industrial loans to be repaid </li></ul><ul><li>Ratio of consumer installment debt to personal income </li></ul><ul><li>Change in consumer price index for services </li></ul>
  13. 17. MAJOR ECONOMIC INDICATORS

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