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Economic Indicators
Learning Target: I can identify key economic indicators.I can show I understand GDP, unemployment, and inflation by analyzing primary source documents and answering related questions.
Warm-Up: A Letter from a Young WomanRead the letter to First Lady Roosevelt.
With a partner, discuss and answer the following questions in the top part of your notes… What does the letter reveal about this woman’s life?
During what time period was this letter written? How do you know?
What do you think was happening to consumer spending and business during the Great Depression? To people’s jobs? To prices and wages?
What details can you share about the health of the US economy during this time in US history?
Modern-Day Connection
Click the image to watch the video
Economic IndicatorsEconomies have times of health and
sickness.
Economic indicators: statistics that help economists judge the health of economies.
How Do Economists Measure the Size of an Economy?Gross Domestic Product (GDP)
Per Capita GDP
Consumer Price Index (CPI)
Unemployment
Inflation
Deflation
What is GDP? Gross Domestic Product (GDP): The market
value of all final goods and services produced within a country during a given period of time
It is the measure of a country’s total output
The main measure of the size of a nation’s economy
GDP Definition Breakdown…
The market value…—the price consumers are willing to pay for a good or service in a competitive marketplace.
…of all final goods and services…—any legal good or service that is ready for use by consumers (not intermediate goods like steel, grain, etc.)
GDP Definition Breakdown…
…produced within a country…—goods and services made within its borders (but not necessarily a U.S. company-Ex. Toyota)
…during a given period of time…the Bureau of Economic Analysis calculates GDP every quarter (3 months)
What is Per Capital GDP? Per Capita: per person
Per Capita GDP: a nations real GDP divided by its population.
A good measure of a society’s standard of living
Per Capita GDP Example 2011 US GDP
$14.4 trillion
What is the US per capita GDP?
2011 Norway GDP $492 billion
What is the Norway per capita GDP?
Which has a higher standard of living?
What is Consumer Price Index (CPI)?
Consumer Price Index (CPI): A measure of price changes in consumer goods and services.
It shows changes in the cost of living over time.
Sometimes called “cost-of-living index”
Serves as the main measure of inflation
Consumer Price Index (CPI)
The Bureau of Labor & Statistics surveys thousands of households and researches retail prices monthly.
Using this data, they track changes over between two periods (Oct. 2008-Oct. 2009)
Example: A 2% increase in the CPI from Oct. to Oct. would indicate a 2% rate of inflation.
What is Unemployment?
Unemployment rate: The percentage of the labor force that is not employed, but is actively seeking work.
Like GDP and CPI, it is an indicator of an economy’s health.
Unemployment Rate
Unemployment Types Frictional unemployment: People “between
jobs” and looking for for the “right job”
Example: people who have left one job to look
for another, or are looking for
their first job
Unemployment Types Structural unemployment: Loss of jobs due
to technology creating a decrease in demand for their skills
Examples: Travel agent, VCR repair
Causes hardships, but is overall good for an economy—technological progress
Unemployment Types Seasonal unemployment: Loss of jobs due
to the time of year
Examples: tourism, holidays, construction, agriculture
Cyclical unemployment: Loss of jobs during a period of economic decline
Example: Dot-com web development in early 2000s
DO NOW
Get out your “Economic Indicators” Notes from last block
Homework tonight: Inflation Article—Depth & Complexity AND QUESTIONS ON THE BACK
Entrance Ticket—
Answer ON YOUR OWN PAPER
What does GDP stand for?
What is NOT included in GDP?
Our class (pop. 10) and Mr. Rohmann’s class (pop. 25) both have a real GDP of 25…what is this indicator called?
What is it a good measure of?
What is CPI a good indicator for?
What are the 4 types of unemployment?
Economic Indicators
Learning Target: I can identify key economic indicators.I can show I understand GDP, unemployment, and inflation by analyzing primary source documents and answering related questions.
What is Inflation? Inflation: an increase in the overall price level
of goods/services produced in an economy.
Germany after WWI is a prime example of an unhealthy economy.
Forced to pay war reparations at the end of the war in 1918, Germany’s economy printed more money. The result was hyperinflation and more hyperinflation (Click me!)
What is Inflation? Demand-pull inflation: inflation caused by
a “pull” on prices—consumers demand more goods/services than an economy can produce, driving prices up
Cost-push inflation: inflation caused by a “push” on prices—rising cost of production causes prices to rise
Video Clip
What is Deflation? Deflation: the opposite of inflation, fall in
the price of goods or services
Good news for consumers and savers. -The value of saved $ will increase as prices fall
Bad news for businesses. -Price drops result in decreased demand as they wait for prices to drop more.
Stagflation
Combination of “stagnation” and “inflation”
Usually when economy is shrinking (GDP falling, Unemployment rising) we experience deflation.
If the economy is shrinking AND prices are rising, this is stagflation.
Caused in the US in the 1970s by huge increase in the price of oil.
Other Indicators
Misery Index – unemployment rate + inflation rate
Housing starts – new housing construction
Broadband internet access
Consumer confidence – how willing are consumers to spend their money?
Economic Indicators Gallery Walk
Visit each of the four visuals-- make predictions about GDP,
unemployment, inflation and the business cycle during the depression.
Complete the Handout to turn it in.
EXIT TICKET—Comprehension Check
OYOP, use complete sentences to answer the following questions:
1. What does GDP stand for? How is it calculated?
2. What kinds of goods are NOT used in calculating GDP?
3. What kinds of goods and services are used to calculate CPI?
4. What are the 4 types of unemployment?
5. In your opinion, which of these is the BEST indicator of an economy’s health AND WHY?
Collaborative Practice
Draw your number—You will work your group of 3-4 students.
Each group will get 3 pieces of construction paper, highlighters (blue, green, yellow, and pink), scissors, and glue sticks.
Cut out each of the Economy descriptions and glue them at the top of each piece of paper.
Cut each of the puzzle pieces and sort them (photos, GDP graphs, unemployment graphs, and inflation graphs) and set them to the side.
Create each “puzzle board.” Below each economy’s description, use the highlighters to create 4 boxes slightly larger than each of the puzzle pieces.
Blue-Image Green-GDP Yellow-Unemployment Pink-Inflation
STEP 1: Setting Up the “Puzzle” Boards
Read each economy’s description. Information from each will match up to one of the each of the economic indicators provided.
Highlight the information from each description related to each of the indicators. For example, highlighting the text in the description related to GDP green.
DO NOT glue the pieces until you have agreed and are sure they have sorted correctly according to the information in the description.
STEP 2: Examine the Economies
OYOP—USING COMPLETE SENTENCES, ANSWER EACH
Analyze each of the 3 economies and answer the following questions:
1) Identify one way the government intervened in each economy.
2) Based on the information you examined, which economy would you say is the “healthiest?” Provide at least 2 pieces of information from the data provided to justify your answer.
Exit Ticket: You’re the Economist…
