ECONOMIC INDICATORS

Gross Domestic Product Gross Domestic Product (GDP) is the value, expressed in dollars, of all final goods and services produced in a year. The production of these goods and services provides jobs for people in the economy. The income people earn is then used to consume goods and services.

Gross Domestic Product Final goods are the goods and services sold to consumers. Intermediate goods are things that are produced and then used in the production of other goods and services. For example, the denim produced in mills is used in the production of jeans. In this example, denim is an intermediate good and the jeans are a final good.

Which of the following is the INTERMEDIATE GOOD Wood Table

Which of the following is the INTERMEDIATE GOOD Steel Bridge

Which of the following is the INTERMEDIATE GOOD Flour Muffins

Top 10 Countries (GDP) 1 United States 15,094,000,000,000 2 China 7,318,499,000,000 3 Japan 5,867,154,000,000 4 Germany3,570,556,000,000 5 France 2,773,032,000,000 6 Brazil 2,476,652,000,000 7 United Kingdom 2,431,589,000,000 8 Italy 2,194,750,000,000 9 Russian Federation 1,857,770,000, India 1,847,982,000,000

On your paper… Make a list of all of the final goods and services you used from the time you woke up yesterday until you went to bed last night. Items should not be listed more than once. Be sure to include final goods easily overlooked. For example, how was breakfast prepared? (Microwave, toaster, refrigerator) Did you turn on the light in the bathroom to shower? (electricity) Did you use soap, shampoo, toothbrush, and toothpaste?

Look over the list you have just created and think about the large number of goods and services you rely on to satisfy your wants each day. Who buys these items? How does your family obtain most of the goods and services it wants?

Consumption Spending by households is called consumption or consumer spending because the products provide direct satisfaction to consumers. When we measure GDP, consumer spending represents the largest category. Consumer spending makes up over two-thirds of the GDP.

Durable and Nondurable Goods Durable goods refers to consumer goods that will last longer than three years. Nondurable goods includes consumer goods expected to last less than three years.

Going to the dentist is an example of a: a) durable good b) nondurable good c) service

Going to the dentist is an example of a: a) durable good b) nondurable good c) service c) service

A computer is an example of a: a) durable good b) nondurable good c) service

A computer is an example of a: a) durable good b) nondurable good c) service

Gasoline is an example of a: a) durable good b) nondurable good c) service

Gasoline is an example of a: a) durable good b) nondurable good c) service

Car insurance is an example of: a) durable good b) nondurable good c) service

Car insurance is an example of: a) durable good b) nondurable good c) service

Consumer Price Index The Consumer Price Index (CPI) measures the change in the overall cost of a variety of consumer goods and services. Consumer Price Index is measured by first creating a market basket of thousands of items purchased by consumers -- Such as food, housing, clothing, transportation, medical care, recreation, education, communication, and energy.

Consumer Price Index The prices of the specified products are measured each month, and the percentage change in price from month to month is reported as the Consumer Price Index. The Consumer Price Index generally increases during economic growth During economic decline, the rate of price increase slows or prices may even decline.

Consumer Price Index

Industrial Production Industrial Production measures the output of American industry. Industrial Production is measured by calculating the manufacturing output in the consumer goods, business equipment, construction supplies, materials, manufacturing, mining, and utility industries. Production is calculated in each sector monthly, and the percentage change in output is reported as Industrial Production.

Industrial Production Durable goods, such as cars, appliances, and furniture, as well as construction supplies, tend to be more sensitive to economic changes than are other manufacturing products. Generally, Industrial Production increases during economic growth and falls during periods of economic decline.

Interest Rates Interest rate is the percentage more that you have to pay back on something. A 10% interest rate means you have to pay back what you owe, plus 10% more A decline in interest rates can lead to more spending in order to promote economic growth; High interest rates can lead to lower levels of investment and a decline in the rate of growth

Non-farm Payroll The Non-farm Payroll measures the number of people employed by companies and government. Non-farm Payroll generally rises during economic growth and falls during economic decline.

Unemployment Unemployment surveys are conducted once a week The Unemployment Rate measures the percentage of people in the labor force who were not working during the week of the survey But they had looked for work within the previous four weeks

Unemployment The Department of Labor Bureau of Labor Statistics surveys thousands of Americans each month to calculate the size of the labor force The Labor Force consists of those ARE working plus those that ARE NOT working, but seeking work The unemployment rate is calculated via the number of unemployed divided by the total labor force

Demand Periods of economic growth are often fueled by increased demand for economic products. This increased demand often causes GDP to increase, while simultaneously causing prices to go up. Firms increase their production to meet that increased demand, and often hire additional workers, increasing the payroll and reducing the unemployment rate. The increased demand for products can also result in increased demand for loans to purchase products, increasing interest rates.

Demand Recessions, on the other hand, are often fueled by a reduction in demand for goods and services. Firms reduce production in response, lowering GDP, and prices. Production cutbacks lead firms to lay off workers, increasing the unemployment rate. Reduced demand for loans can result in lower interest rates, and the Federal Reserve may further reduce interest rates in an attempt to stimulate spending in the economy.