Economic Indicators Business Cycle –“Real” GDP versus “Nominal” –GDP Deflator –C+I+G+NX –6 month contraction = Recession Unemployment Rate –4 Types –Calculation Inflation –CPI/GDP Deflator –Cost of Living Adjustment –“Real” Income

Causes cancer Why entering Chinese waters? REI Black Friday closing Republican poll leader University removed state flag

GDP Total value of all final goods and services produced within a country within a given year. C+ I+ G+ NX

Gross Domestic Product C- Consumer Spending I- Business Investment and Inventory G- Government Spending NX- Net Exports (Exports minus Imports)

GDP C + I + G + NX Don’t Count –Used –Transfers –Non-market –Intermediate goods*

Business Cycle Recession- real GDP goes down for at least 6 months. REALGDPREALGDP

Unemployment Unemployment Rate= Unemployed Persons/Total Labor Force X 100 Labor Force= all civilians 16+ who are working or looking for a job Unemployed Persons= 16+ civilians who are looking for a job but do not have one

All Stats are for People 16 or Older Population = 1000 Pop. with jobs = 600 Pop. Without jobs = 400 Pop. Actively seeking employment in past month = 190 Pop. from previous category who currently have a job = 40

Unemployment (National)

Types of Unemployment Frictional- temporary while searching Structural-lack of skills/lack of need for skills/replacement by technology/replacement by merger or streamlining Cyclical- related to health of overall economy Seasonal- seasonal Not

Not Unemployed If… Under 16 Have a Job Are not actively seeking a job Are not currently available to work

Poor _________ Extra Credit Write a story about a person who experiences all 4 types of unemployment in a given year and then drops out of the labor force. 1 page double spaced 6 points

Unemployment Formula Unemployment Rate= Unemployed Persons/Total Labor Force X 100 Labor Force= all civilians 16+ who are working or looking for a job Unemployed Persons= 16+ civilians who are looking for a job but do not have one

Frictional Structural Cyclical Seasonal Not

Hit the debt ceiling, government slashes spending, GDP tanks Frictional Structural Cyclical Seasonal Not

You can’t stand this class anymore, drop out, and start looking for work Frictional Structural Cyclical Seasonal Not

A former switchboard operator is having trouble finding a skilled position Frictional Structural Cyclical Seasonal Not

New Jersey surf instructor in January Frictional Structural Cyclical Seasonal Not

Mr. Parish this summer. Frictional Structural Cyclical Seasonal Not

Calculate Population = 14,000 Population = 10,000 Employed Persons = 6,000 Unemployed Persons = Labor Force = ____________ Unemployment Rate = ______________ Labor Force Participation Rate = _______

Unemployment (National)

Labor Force Participation Rate

% of working age people who are –Working –Looking for a Job Working Age –16-64

Calculate Population = 14,000 Population = 10,000 Employed Persons = 6,000 Unemployed Persons = Labor Force = ____________ Unemployment Rate = ______________ Labor Force Participation Rate = _______

Labor Force Participation Rate % of working age people who are –Working –Looking for a Job % working age population in the labor force Working Age –16-64

Calculate Population = 10,000 Population = 8,000 Employed Persons = 5,000 Unemployed Persons = Labor Force = 5,350 Unemployment Rate = 6.54% Labor Force Participation Rate = 66.88%

Agenda Debate and House News –Goodbye Mr. Weeper! GDP Review and Unemployment by State Measures of Inflation –CPI versus GDP Deflator 10 minutes to finish classwork (otherwise HW)

Economic Indicators Business Cycle –“Real” GDP versus “Nominal” –GDP Deflator –C+I+G+NX –6 month contraction = Recession Unemployment Rate –4 Types –Calculation –Labor Force Participation Inflation –CPI/GDP Deflator –Cost of Living Adjustment –“Real” Income Stock Indices

2015 US GDP: C+I+G+NX Sale of a Delorean

2015 US GDP: C+I+G+NX Purchase of $10,000 of Disney stock

2015 US GDP: C+I+G+NX 10,000 unsold Ford f-150 pickups

2015 US GDP: C+I+G+NX Tires purchased by Ford Motor Company

2015 US GDP: C+I+G+NX Machines purchased by Ford Motor Company

2015 US GDP: C+I+G+NX East Penn Schools purchases an iPad for every student

2015 US GDP: C+I+G+NX I just purchased a Man in the Yellow Hat costume

2015 US GDP: C+I+G+NX A bottle of delicious Canadian maple syrup Eh?

2015 US GDP: C+I+G+NX Largest Component by far?

2015 US GDP: C+I+G+NX Component that would shrink if a Republican is elected and keeps his/her promise

Inflation Prices go Value of the dollar goes

Inflation Prices go UP Value of the dollar goes DOWN

Inflation TWO CAUSES?

Demand-Pull Inflation

Cost-Push Inflation

Stagflation

Measures of Inflation GDP Deflator Consumer Price Index (CPI)

Inflation Terms Nominal- unadjusted dollar amounts Real- adjusted for inflation

Using the GDP Deflator Nominal $$$$/GDP deflator x 100= Real $$$ Real $$$ = Adjusted for Inflation Base Year Deflator = 100

Consumer Price Index Measures change in price level of a “fixed basket of goods” Used for Social Security “cost of living” adjustments (COLA)

Consumer Price Index Herbert Hoover= $75,000 President Obama = $400,000

Consumer Price Index Babe Ruth’s Salary –1931= $80,000 Average Player Today= $2,272,620

Consumer Price Index

GDP Deflator

GDP Deflator versus CPI GDP Deflator –variable basket –Best for real GDP CPI –fixed basket –Best for COLA (ex. Social security)

Stock Indexes (Indices) measure the performance of a segment of the stock market Dow Jones Industrial Average –30 Large Companies S&P companies of various industries NASDAQ –3,000 companies –Technology/growth companies (ex- Google)

Stock Indexes (Indices) measure the performance of a segment of the stock market Dow Jones Industrial Average –30 Large Companies S&P companies of various industries NASDAQ –3,000 companies –Technology/growth companies (ex- Google)

Stock Indexes (Indices) measure the performance of a segment of the stock market Dow Jones Industrial Average –30 Large Companies S&P companies of various industries NASDAQ –3,000 companies –Technology/growth companies (ex- Google)

NASDAQ

Stock Terms Ticker- company abbreviation Share- a single “piece” of a company “pie” Portfolio- a collection of investments Index- measures performance of a segment of the stock market

Economic Indicators Business Cycle –*GDP = 18.1 Trillion –GDP Growth = 2% (3.22% average since 1948) Unemployment Rate –*5.1% Inflation –CPI Stock Indices

Externalities Consequence of economic activity affecting an uninvolved party Positive or Negative Production or Consumption