Economic Indicators & Related Terms Flashcards
5 main economic indicators
GDP, CPI, unemployment rate, stock market, sales
Macroeconomics
the study of economics as a whole
GDP (Gross Domestic Product)
the dollar amount of all goods, services, and structures produced within a country’s boarders in one year
excludes second-hand sales, illegal/underground market sales, intermediate products aka parts of a whole, and non-market transactions like baby sitting or lawn mowing
Pros of the GDP
- the best measure of economic health, most inclusive
- the most important economic stastistic
Cons of the GDP
- does not take into account the quality of life (more money being spend and more production does not necessarily equal happiness)
- inflation, it changes the GDP but just cuz things cost more doesn’t mean people are actually buying more
Inflation
a rise in the general prices level of goods, services, and structures
Recession
when the GDP goes down for 6 consecutive months
CPI (Consumer Price Index)
the overall change of prices over time
different from inflation as it is the change over a smaller period of time while inflation is the bigger picture
Unemployment Rate
the percentage of unemployed workers in the total labor force
Revenue
income for the year (ex: for the US fed gov, #1 revenue is income tax)
Expenditures
money spent in one year (ex: for the US fed gov, #1 expenditure is on the military)
Federal Budget
total revenue and expeditures within a nation in year
Deficit
when the expenditures are more than the revenue in a year, deficit gets added to the national debt each year
Surplus
when the revenue is more than the expenditures
Difference between deficit and national debt
deficit - a year
national debt - total history of all deficit since the country’s birth
