1. Economic Measurements

2. When is an Economy Successful ?

3. Economic Measurements
Accurate information about an economy is essential to the measurement of an economy.
Countries use key measurements to measure their economic strength.

4. Employee Productivity
Productivity is output per worker hour that is measured over a defined period of time
(a week, month, or year).
Productivity is a crucial factor in a country’s
standard of living.
Higher productivity, improves company’s profit

5. Ways To Improve Productivity
1. Invest in new equipment or facilities
that allow workers to be more efficient
2. Provide additional training
3. Provide financial incentives
4. Reduce workforce and increase the
responsibilities of those staying in the
workplace

6. Gross Domestic Product (GDP)
A measure of the goods and services produced using labor and property located within a country.
Gross National Product (GNP)
The total dollar value of goods and services produced by a nation, including goods produced abroad.
With GNP, it doesn’t matter where it is produced!

7. Difference between GDP vs GNP
With GNP, it is not where the production takes place but who is responsible for it.

8. Standard of Living
A measurement of the amount of goods and services that a nation’s people have.
Reflects their quality of life

9. Inflation Rate Inflation refers to rising prices.
A low inflation rate is good (1-5%) because it shows that the economy is stable
Double digit inflation devastates an economy (10 or higher)
When inflation gets high money does not have the same value it did under times of lower inflation
When inflation gets high, money losses its value

10. Inflation Rate
Controlling inflation is one of a government’s major goals
When inflation goes up many governments raise interest rates to reduce everyone’s ability to borrow money
The rise in interest rates causes a slow-down in economic growth which helps to bring inflation down

11. Producer Price
Index (PPI)
Measures wholesale price levels in the economy.
It is often a trend setter because the price increases are often passed along to the consumer
When there is a drop in the PPI there is usually a drop in the CPI
Consumer Price
Index (CPI)
Also called the cost of living index
Measures the price increases in over 400 goods and services used by the average urban household
Items such as food, housing, utilities, medical care, and transportation

12. The Unemployment Rate All nations chart unemployment or jobless rates
The higher the unemployment rates the greater the chances of an economic slowdown
The lower the unemployment the greater the chances for an economic expansion
This rise and fall manipulates the economy because the number of people working, spending money, and paying taxes contributes to the economy and keeps the government from paying so much for social services

13. Business Cycle
Expansion
Recession
Recovery
Trough

14. Business Cycle
Expansion/Prosperity – a period of economic growth and expansion (low unemployment, increased output of goods, and high consumer spending)
Recession – a period of economic slowdown (rise in unemployment, fewer goods and services are produced, and consumer spending decreases)
Depression/Trough – a period of prolonged and deep recession (very low consumer spending, unemployment is very high, and production of goods and services is very low) Poverty results
Recovery – a period of renewed economic growth (reduced unemployment, increased spending, and moderate expansion by business)