Economic Measurements

1
Chapter 4

• Economic Measurements

2
Measuring Economic Growth

• Economic growth refers to a steady increase in
  production of goods and services.
• A high rate of employment and a low rate of
  business failures are two indications our economy
  is doing well.

3
Measuring Economic Growth

• The U.S. has 7 of the worlds land and 5 of the
  worlds population, yet we produce 25 of all
  goods and services.
• One way to find out how the economy is doing is
  to measure output from year to year.

4
Measuring Economic Growth

• The gross domestic product is total dollar value
  of all goods and services produced in a year.
• Only final goods are counted towards the GDP.
• If the GDP increases from year to year, the
  economy is growing.

5
Measuring Economic Growth

• Measuring productivity is another way to measure
  our economy.
• We produce more to due modern technology and
  efficient work methods.

6
The Business Cycle

• Our economy runs in cycles, it has its ups and
  downs.
• The movement of the economy from one condition to
  another is called the business cycle.
• 4 phases of a business cycle.

7
The Business Cycle

• Prosperity Wages are good, unemployment is low.
• Recession Unemployment rises, businesses scale
  back production.
• Depression Weak sales, businesses fail more.
  (1930-40)
• 25 unemployment rate

8
The Business Cycle

• Recovery Unemployment begins to decrease,
  consumers regain confidence.

9
Inflation Deflation

• Inflation is a sustained increase in the general
  level of prices.
• Deflation means a decrease in the general level
  of prices.

10
Our Economic Future

• The ability of an economy to produce output
  determines its growth.
• Some current economic problems
• Health Care
• Housing