Thursday March 8, 2012 – Periods 1 & 3
Monday March 12, 2012 – Periods 4 & 6
Today we learned that measuring national output deals with the economy using aggregate measures of output, income, prices, and employment. Gross Domestic Product (GDP) is the nation’s most comprehensive measure of total output. Economists view the economy as being organized into four sectors: the consumer or household sector, the investment sector, the government sector, and the foreign sector. These sectors are then combined to form the output-expenditure model, which is written as GDP = C + I + G + F.
Business cycles are the regular ups and downs of real GDP. There are many factors that influence business cycles: changes in investment spending, innovation and imitation, monetary policy decisions, and external stocks.
Every month, the Census Bureau identifies unemployed persons. The number of unemployed is then divided by the civilian labor force to find the unemployment rate. The unemployment rate is comprehensive, but does not count the dropouts, nor does it distinguish between full and part time employment. The kinds of unemployment include frictional, structural, cyclical, and seasonal unemployment. As a result of unemployment, uncertainty, political instability, and social problems can occur.
Inflation is the increase in the general level of prices of goods and services. Several price indexes are used to measure inflation. The consumer price index (CPI) is a statistical series that tracks monthly changes in the prices paid by urban consumers for a representative “market basket” of goods and services. The CPI is used to measure inflation. Causes of inflation include strong demand (demand-pull), rising costs (cost-push), and wage-price spirals, along with a growing supply of money. Therefore, inflation can reduce purchasing power, distort spending, and affect the distribution of income.
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