Unit 6 Measuring the Economy

Transcription

1 Unit 6 Measuring the Economy - Study Guide - Answer, Explain and define the following: 1) GNP 2) GDP 3) Dept. of Commerce 4) Intermediate goods 5) Disposable personal income 6) Contraction 7) Recession 8) Lagging indicator 9) Peak 10) Trough 11) Business Cycle and its four stages 12) Why do Business Cycles Occur? 13) Inflation 14) Hyperinflation 15) Types of Inflation and how the work 16) Stagflation 17) How the Fed tries to maintains national financial stability 18) Labor Force 19) Underemployment 20) What is a Census 21) Coincident indicator 22) Cyclical employment 23) Frictional employment 24) Seasonal employment 25) Structural employment 26) What is a tolerable unemployment rate? 27) What is a Lorenz curve? 28) What is Welfare 29) Causes for Poverty 30) Poverty levels Name and explain 3 reasons why unemployment might occur.

2 The Government s Necessary Role -Macroeconomics & Microeconomics- The Gov t tries to prevent free enterprise from having in economic behavior. Microeconomics - analyzes the Small Unit economic behavior of Individuals, Households and Firms to understand their decision-making process. analyzes the -such as changes in unemployment, national income, rate of growth, gross domestic product, and inflation and price levels. -Changing Public Attitudes- - As a result of the Great Depression, Americans began to see the need for - To jump start the economy Franklin Roosevelt implemented his New Deal, -Why has the American government grown so large? Government has grown to meet the needs Since the 1930 s the Gov ts main effort is to ease The Federal of people in the US. As of April 2017, nearly in the US work force work for the government (this includes Federal, State, & local). -Government s Necessary role- - Prohibits discrimination - Stabilizes the - Encourages economic growth - Educate the consumer (Public laws) - Collect - Provides -Rising Standard of Living Effect: As so do public expectations: a) More demand for. b) Increased to protect property rights, contracts, labor rights, and other business activities. c) stops businesses from taking unfair advantage of consumers, workers, and promotes competition. d) crises such as wars & storms increase public dependence of the gov t to assist in recovery. Government growth leads to -Providing Public Goods- Public sector the segment of the economy which - The gov t gets involved in the economy to not provided by Private Sector. - - a shared good or service provided by the government. Examples: Roads, dams, and, etc. - It would be impractical for to pay individually for it. - or efficient for private business to do so. - Those who can benefit: a) one who receives the benefits of public goods who either can t or aren t willing to pay for them. b) Total benefits to outweigh the financial costs.

3 Gross Domestic Product & Growth -National Income Accounting- Because of the Great Depression economists felt they needed to monitor our economy, so they can predict and prevent trouble. Macroeconomists analyze the economy using statistics that track the income, spending, and of a nation. These estimates are based on. The collects data to determine the strength our economy. The most important of those measures is -Gross Domestic Product (GDP)- - The total value of all produced within a Country s in 1 year. - To be included in GDP, a good or service has to fulfill three requirements: 1) rather than intermediate goods are counted: a) Intermediate goods are those goods added to another product to b) used to make a shirt intermediate good; the is a final good. 2) Must be produced during a period, regardless of when it is 3) Must within the nation s borders. Products made in foreign countries by U.S. companies are in the U.S. GDP. - Countries with have standards. The United States has the largest GDP of any Country. -How is GDP determined?- The they group national spending on final goods and services according to the four sectors of the economy- - - (GDP = C + I + G + E). Consumer Spending (C): of goods and services. Investment (I): on equipment, machinery, & buildings and inventory investment. Government Purchases (G): Total value of purchases by governments. Net Exports (E): goods and services produced in the U.S. but countries Two Types of GDP - Nominal GDP - the of goods and services. - Real GDP - is an for changes in prices from year to year. - is the difference between Real and Nominal GDP - Real GDP is adjusted for it. -Other Economic Performance Measures- GNP is the total value of all goods & services produced (Running business in other countries) by the citizens of a country in 1 year. - Subtracts income earned in U.S. by and citizens - Adds production of companies owned & operated by US citizens National income (NI) the total in a nation from the production of goods and services in a given time period. Personal income (PI) the income received by a from all sources in a given time period. Disposable personal income (DPI) is personal personal income. It shows how much money is for consumer spending

4 Business Cycle -The Business Cycle - Business Cycle is of a market system s economic activity. The which the business cycle include: Employment Income Production Spending/Savings Interest rates Investments... -Phases of the Business Cycle- 1. Recovery of economic : a) Expansion: period of growth, an increase in GDP. 2. Peak point where the and the country is at its & most productive The economy grows through: a) Capital is increase c) Government b) A higher savings rate d) Technological progress 3. Contraction economy s period of : a) : a business - a decline in GDP for Two economic quarters (around 6 to 18 months). b) : extended period of 4. Trough economy s at which real GDP and employment -Why Business Cycles Occur- There are four basic factors that causes these cycle shifts: 1) Decisions made by - Demand slump for products or new technology: a) Aggregate demand is the total amount of goods and services at each and every price level on a nationwide level. b) Aggregate supply is the total amount of goods and services that at each and every price level on a nationwide level. 2) Changes in rates-to to make purchases. Consumers often use to buy new cars, home, electronics, and vacations. If the interest rates on these goods, consumers are less likely to buy them. The same principle holds true for businesses who are deciding whether or not to buy new equipment or make large investments. 3) The expectations of consumers: report: 5,000 households are surveyed 4) External shocks to the economy: and other conflicts. -Predicting the Business Cycle- Leading Indicators: where the economy by tracking: a) Number of issued b) Average (manufacturing) c) Average claims d) Stock prices of the 500 common stocks Coincident Indicators: reflect the economic status: a) income b) volume c) industrial Lagging Indicators: what has taken place a change in the cycle: a) Use of consumer b) Size of

5 Inflation & Business Cycles -Trying to control the cycles- - The takes actions to regulate the economy. It tries to influence the GDP levels and - Monetary policy is the actions of the Federal Reserve determining the size and rate of growth of the, which in turn affects - There are two types of monetary policy, expansionary and contractionary. - Expansionary monetary policy supply in order to lower unemployment, private-sector borrowing and consumer spending. - Contractionary monetary policy of growth in the money supply or outright supply in order to control inflation. There is a chance it slows economic growth, increase unemployment and depress borrowing and spending. -Inflation- - Inflation - An in consumer prices. is a tolerable rate. - Inflation is a measure of consumer : the ability to buy goods and services. - Prices are expected to. - Inflation becomes a concern when at the same rate. - describes periods during which at the same time that there is a activity. -TYPES OF INFLATION- DEMAND- PULL: - Demand Supply. - DEMAND! COST PUSH: Prices are raised to - COSTS! -Consumer Price Index- is a measure of changes in the of goods and services commonly purchased by consumers. The Gov t constructs a : a sample of a variety of goods & services like:, medical care, entertainment. Places a value on these basket items and compares prices to a BASE YEAR- which. Deflation is a level. -How the Fed tries to maintains national financial stability: Open Market Operations (OMO) - The buying and selling of gov t in the open market in order to or contract the amount of money in the banking system. a) The Fed makes to help the economy - (more money = more spending = more jobs) b) Taking of circulation to the economy - (less money = less spending = slowing inflation rate) Gov t prints to much, but same amount of goods and exist so prices

6 Unemployment -Unemployment- Labor Force: those currently working or looking for work. Bureau of : the government organization which keeps track of labor. -Unemployment Rate- The Census Bureau conducts a. A is used as a model. To get the official Percentage: - They the number of people (Labor force) together. - Then the number of unemployed is force number, finally (X) 100. unemployment rate. -Types of Unemploymenta) : When people are fired, laid off, or quit -Time spent between jobs when a worker is searching for another one. *THIS IS HEALTHY FOR AN ECONOMY - IT SHOWS CHOICE b) : workers who have short-term jobs based on the season - those who work during certain times of the year. c) : a situation where jobs exist but workers looking for work do not have the necessary skills for these jobs: ~ changes in ~ new found ~ change in ~ lack of ~ globalization d) : caused by fluctuations in the business cycle: rises during a downturn, falls during the cycles up rise. -Under-employed- Underemployment: those employed in a job for which they or positions but desire full time jobs. Full Employment does, because: There will always be structural, frictional and seasonal unemployment. -The Impact of Unemployment- Unemployment is. It wastes, one of the key factors of economic growth. Unemployment does not follow rules. In an economic slowdown, those with the lose their jobs first usually and the young. Unemployment for long periods of time may. Lose faith in their to get a job that suits their skills. Potentially productive workers may give up their. If they are underemployed, they may not be motivated to do work.

7 Economic Challenges -Poverty- Poverty is a situation in which a person and resources to achieve a of living. The government looks at various data to determine the (economic well being) of citizens. -Poverty Threshold- the income level which determines a sufficient income level for a family or household = 2 or more people related by marriage, birth, or adoption. = all people who live in the same home regardless of relation. -Poverty Level- Poverty level 2015: 1Person $11,770 2P 3P 4P 5P 28,410 6P 32,570 - A four-person family unit with two children, the 2008 poverty threshold is $24,250 - One individual under is $11,770 - For a single parent w/ 1 child = $15,930 - Total incomes levels are considered. **From the US Dept of Health & Human Services -Income Distribution- illustrates how the nation s is distributed between the citizens. The top of wealthiest Americans own all wealth (those who earn more than $1 million/yr). The upper class (highest 20%) received 48% of the total, equal to the proportion of the combined middle classes. A graphically illustrates the degree of in a nation -Causes for Poverty- Lack of : higher education equals higher earning potential. : cities have more people, more competition for jobs. Discrimination: discrimination still exist to some extent. Family Structure: more trying to live on 1 income. -Welfare- Welfare - government economic and social programs that provide. Most of the programs are paid by citizens. Since the 1980s and 1990s, the government uses tax breaks, grants,, and other initiatives in addition to cash benefits. of 1964, helps ensure that no one will go hungry. Qualifying individuals and families receive electronic benefit, which have replaced the paper food stamp offers health care for the and is funded by both the federal and state governments. Social Security program which pays benefits to, survivors, and the is the largest gov t program - All are entitled to monthly checks to help with living expenses. - From 1960 to 1995, the poverty rate of those aged 65 and over fell from about percent to about percent.

8 Project - Measuring the Economy Objective: Create a board game that teaches players about the important vocabulary and concepts from the "Measuring the Economy" unit 6. Keep in mind that some of the best board games have simple rules with simple objectives. Focus your energy on drawing a game board that teaches various elements from the Unit and writing challenging questions(vocabulary and concepts). 25 Questions should include: a. Vocabulary and Concepts from the Unit. b. True/False questions {include answers on the cards}. c. One-word fill-in-the-blanks{include answers on cards}. Steps: 1. Review your notes to determine what you want to include in your game. 2. Together, brainstorm with your group for a good idea for a board game. Your board game must have mind blowing eye appeal. 3. Design and write down the rules - Include the number of players - How to play the game - How an individual moves & scores pts - How to win. 4. Create the game board and pieces: Can use real games for inspiration. 5. You will be presenting your game. Grading: The grade for this project will be based upon Creativity{the steps listed above}, Content of the 25 questions, Organization/Neatness, Board Development, and Presentation. It will be a point scale