GDP Comparisons Rank Country GDP (millions of USD) —World 54,347,038 1 United States 13,811,200 — Eurozone 12,179,250 a a 2 Japan 4,376,705 3 Germany 3,297,233 4 China (PRC) 3,280,053 5 United Kingdom 2,727,806 6 France 2,562,288 b b 7 Italy 2,107,481
CPI – Consumer Price Index The price of a selection of goods and services purchased by a “typical consumer”.
Inflation A general rise in the level of prices of goods and services over a period of time. –Change in CPI
Unemployment Rate Percentage of the population without a job but looking for work. Is a stay at home Mom considered part of the unemployment rate?
1. Frictional: People who have quit work They didn’t like the job, boss, working conditions and they haven’t found a new job 2. Structural: caused by the restructuring of firms or mismatch b/ skills of job seekers and the requirements (location) of available jobs Example: coal miners in an area where mines are closed 3. Cyclical: occurs b/c of a recession Most serious type of unemployment 4. Seasonal: Demand for labor varies over the year Example: harvesting of crops
Period of economic growth GDP Increases Unemployment generally decreases Inflation generally increases
Highest level of economic activity GDP stops increasing Unemployment stops decreases Inflation stops increases and may start decreasing
Period of economic decline GDP decreases Unemployment increases Inflation generally decreasing
Lowest level of economic activity GDP stops decreases to lowest levels Unemployment is at its highest levels Inflation stops decreasing and may start increasing
Expansion : Rising prices, GDP rises, jobs growth Expansion
Peak : A period of prosperity, growth stops Expansion Peak
Contraction : Unemployment rises, consumer spending low, profits low- 6m to a year Inflation Peak Contraction
Trough : Long term major slowdown, unemployment soars, firms fail. Inflation Peak Recession Trough
Recession: Real GDP must fall for at least 6 months in a row Depression: Prolonged recession (6-18 months long) ***We attempt to keep the business cycle STABLE. Periods of extreme growth and decline are NOT desirable!
Create a poster illustrating each phase of the business cycle. Each phase should include: Events that might occur Mood of consumers & businesses Pictures