1. Going Big!!!!! Micro Price Quantity Costs Revenues Profits Macro GDP Unemployment Inflation Interest Rates Money Supply

2. 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

3. GDP Total value of all final goods and services produced within a country within a given year. Real GDP- accounts for inflation. C+ I+ G+ NX ________________________________

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

6. GDP C- Consumption (almost 70%) Durable Goods Non-Durable Goods Services (45%) C+ I+ G+ X n ________________________________

7. GDP I- Investment (15%) Business Investment Business Unsold Inventory *Real Estate- commercial and residential C+ I+ G+ X n ________________________________

8. GDP G- Government Spending (18%) C+ I+ G+ X n ________________________________

9. GDP Xn- Net Exports (-505 billion in 2014) –Add exports –Subtract imports –Trade Balance- deficit or surplus C+ I+ G+ X n ________________________________

10. Business Cycle

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

14. LEAKAGESLEAKAGES INJECTIONSINJECTIONS

15. GDP Expenditure Method GDP = C+I+G+Nx Income Method of GDP National Income = R+I+P+W Rent + Interest + Profits + Wages Greatest Component of each?

16. 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

17. Labor Force Participation Rate % of working age people who are –Working –Looking for a Job Working Age –16-64

18. Unemployment (National)

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

20. 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

21. Natural Rate of Unemployment Sum of frictional and structural unemployment If Unemployment Rate – Natural Rate = 0 –Full Employment Natural Rate is Long Term Rate

23. 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

24. Unemployment (National)

25. Labor Force Participation Rate

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

30. Employment to Population Ratio 16-64

31. Employment to Population Ratio 25-54

32. Demand-Pull Inflation

33. Cost-Push Inflation

34. Stagflation

35. Measures of Inflation GDP Deflator Consumer Price Index (CPI)

36. GDP Deflator Nominal $$$$/GDP deflator x 100= Real $$$

37. Calculate Population = 10,000 Population 16-64 = 8,000 Employed Persons = 5,000 Unemployed Persons = 350 --------------------------------------------------------- Labor Force = ____________ Unemployment Rate = ______________ Labor Force Participation Rate = _______

38. Calculate Population = 10,000 Population 16-64 = 8,000 Employed Persons = 5,000 Unemployed Persons = 350 --------------------------------------------------------- Labor Force = 5,350 Unemployment Rate = 6.54% Labor Force Participation Rate = 66.88%

39. 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

40. Natural Rate of Unemployment Sum of frictional and structural unemployment If Unemployment Rate – Natural Rate = 0 Full Employment- Natural Rate is Long Term Rate

41. Inflation Indexes GDP Deflator –converts a “changing basket of goods” into constant dollars. –Find Real GDP Consumer Price Index –Measures price change of a “fixed basket” based on price paid by consumer –Cost of Living Adjustments Producer Price Index –Measures price change of a “fixed basket” based on price paid consumer –Supplier contracts

42. Inflation Indexes Nominal- $ amount in current year $s Real- $ amount in constant $s –Converted to base year $s Base Year = 100 Real = Nominal $ X 100 Index Value

43. Real v. Nominal Interest Rates Nominal = Real Rate + expected inflation rate Real = Nominal – expected inflation rate Who benefits from unexpectedly high inflation? Who benefits from unexpectedly low inflation or deflation?

44. Real v. Nominal

45. Basket of Goods 2020 = $400 (base year) 2021 = $500 Inflation Rate = $ 2021- $ Base Year $Base Year

46. Basket of Goods 2020 = $400 (base year) 2021 = $500 Inflation Rate = $ 500- $ 400 $400 Inflation Rate =.25 or 25%

47. Index Value 2020 = 100 2021 = 125 Nominal GDP 2020 = $20 trillion 2021 = $28 trillion Real GDP 2020 = $20 trillion 2021 = $

48. Index Value 2020 = 100 2021 = 125 Nominal GDP 2020 = $20 trillion 2021 = $28 trillion Real GDP 2020 = $20 trillion 2021 = $22.4 trillion

49. GDP Growth Rate Nominal 2020 = $20 trillion 2021 = $28 trillion Nominal Growth Rate?

50. GDP Growth Rate Nominal 2020 = $20 trillion 2021 = $28 trillion Nominal Growth Rate ($28-$20)/$20 =.4 40% nominal growth

51. GDP Growth Rate Real 2020 = $20 trillion 2021 = $22.4 trillion Real Growth Rate?

52. GDP Growth Rate Real 2020 = $20 trillion 2021 = $22.4 trillion Real Growth Rate? ($22.4-$20)/$20 =.12 12% real growth

53. CPI (Consumer Price Index)