1. SSEMA 1, 2.3

2. What is Macroeconomics? The study of the performance of our economy as a whole

3. Key Economic Indicators This information gives an idea of how the economy is performing

4. #1: Gross Domestic Product The total dollar value of all final goods and services produced in a nation in a year.

5. Calculating GDP GDP = C + I + G + (X-M) C = consumer spending I = business investment G = government spending (X-M) = net exports (total exports – total imports)

6. Why is GDP important? Shows the economic growth of a country (if real GDP has increased, there is economic growth)

7. #2: Consumer Price Index (CPI) Measure of inflation Inflation causes an increase in the average price of goods and services

8. Calculating CPI CPI = (market basket price in a given year/market price in the base year) X 100

9. #3: Unemployment Rate The percentage of people age 16+, actively looking for jobs, and able to work Does not include discouraged workers, under-aged, retired, or underemployed people

10. Calculating Unemployment Rate Unemployment rate = number of people looking for work number of people in the labor force

11. Four Types of Unemployment

12. #1: Structural Unemployment The skills of the labor force do not match those that employers need Investment in education and training reduces structural unemployment

13. #2: Frictional Unemployment Occurs when people decide not to take a particular job because they are looking for a better job

14. #3: Cyclical Unemployment Occurs because of downturns in the economy Result of production cutbacks => layoffs