Measuring the health of the market

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Presentation transcript:

Measuring the health of the market Market Indicators Measuring the health of the market Gross Domestic Product, Inflation, Unemployment and the Consumer Price Index

National Economies have 3 basic goals Economic growth over time (businesses producing, people spending money) Keep unemployment down (make sure people have jobs) Prices remain stable (no large upward or downward swings in prices) No inflation or recession, no deflation or depression

Inflation is public enemy # 1 Inflation is a general trend for an increase in overall prices Inflation is measured by the Consumer Price Index (CPI) The prices of 90,000 products are measured in 85 locations around the nation every month

Inflation Rates Degrees of Inflation Mild inflation-1-5% Strato-inflation: about 10 % to several hundred % Hyperinflation: breakdown of the monetary system (printing too much money)

Unemployment Rate % of people in the civilian labor force not working, but looking for work. Civilian labor force= at least16 yrs old, working or looking for work.

Employability and Income Your employability and income depends greatly on your education, skills, certifications and experience. We can divide these abilities into 4 categories and two ranges Unskilled labor-digging ditches Semi-skilled labor-fry cook Skilled labor-electrician, plumber Professional labor-doctor, lawyer Blue Collar White Collar Income inequality refers to the extent to which income is distributed in an uneven manner among a population.

GDP (nominal) GDP “Gross Domestic Product” is a measurement of the economy which includes all… consumption (C) investment (I) government spending (G) and net exports (X – M) …produced within the national borders of a country.

Consumer spending is by far the largest component of GDP.

Real GDP (growth rate) To compare one year’s GDP to a later year, you must remove the inflation from the later years.

Placing each year’s real GDP upon a line graph will show the real growth rate, also known as the Business Cycle of the economy. Peak Recession Recovery Trough

Until 1991 the main measurement for the economy was Gross National Product (GNP). It calculates the production of all a nation’s citizens and companies around the world per year. GNP

GDP “Gross Domestic Product” is a measurement of the economy which includes all… consumption (C) investment (I) government spending (G) and net exports (X – M) …produced within the national borders of a country. GDP