1. Measurement of Economic Performance
Unit Review

2. Topics to Review CPI Inflation / Deflation
Unemployment & the labor force
Types of Unemployment
Real vs Nominal
GDP & how to calculate it
Circular Flow

3. Will each of the following transactions be included in GDP for the United States? Explain why or why not
Coca-Cola builds a new bottling plant in the United States
Delta sells one of its existing airplanes to Korean Air
Ms. Moneybags buys an existing share of Disney stock
A California winery produces a bottle of Chardonnay and sells it to a customer in Montreal, Canada

4. Answer – 1 point each
Yes, New structures built in the U.S. are included in U.S. GDP
No., The airplane is used, and sales of used goods are not included in GDP
No, this is a transfer of ownership – not new production
Yes, this is an export

5. Unemployment: write the formulas for each of the following terms
Size of the labor force
Labor force participation rate
The unemployment rate

6. Answers – 1 point each Employment + unemployment = labor force
(labor force / population) x 100 = labor force participation rate
(unemployment / labor force) x 100 = unemployment rate

7. Unemployment Define the natural rate of unemployment
The natural rate of unemployment is made up of which of the types of unemployment
Explain how cyclical unemployment relates to the natural rate of unemployment

8. Answers – 1 point each
The natural rate of unemployment is the normal unemployment rate around which the actual unemployment rate fluctuates
The natural rate of unemployment is made up of frictional unemployment
Cyclical unemployment is the deviation of the actual rate of unemployment from the natural rate. Or, cyclical unemployment is the difference between the actual and natural rates of unemployment