Copyright© 2008 South-Western, a part of Cengage Learning. All rights reserved. CHAPTER 4 Where’s the Beef? Inflation, Real GDP, and Business Cycles

Copyright© 2008 South-Western, a part of Cengage Learning. All rights reserved. Exhibit 4-1 Inflation Rate: Weighted Average of Percentage Price Changes

Copyright© 2008 South-Western, a part of Cengage Learning. All rights reserved. Exhibit 4-2 Coverage Differences among the GDP Price Index, Consumer Price Index, and Producer Price Index

Copyright© 2008 South-Western, a part of Cengage Learning. All rights reserved. Exhibit 4-3 U.S. Consumer Price Index Categories, 2006 Source: U.S. Department of Labor, Table 1, ‘‘Consumer Price Index for All Urban Consumers (CPI-U): U.S. City Average, by Expenditure Category and Commodity and Service Group,’’ news.release/cpi.t01.htm (accessed October 27, 2006).

Copyright© 2008 South-Western, a part of Cengage Learning. All rights reserved. Exhibit 4-4 England: Consumer Price Index, 1985–2005

Copyright© 2008 South-Western, a part of Cengage Learning. All rights reserved. Exhibit 4-5 Measuring Compound Annual Inflation Rates

Copyright© 2008 South-Western, a part of Cengage Learning. All rights reserved. Exhibit 4-6 Examples of Countries with Very High Inflation Rates, 1973–1991 Source: International Monetary Fund, The World Economic Outlook Database, pubs/ft/weo/2000/02/data/pcpi_a.csv (accessed January 14, 2006). Bolded figures are annual inflation rates over 1,000% per year.

Copyright© 2008 South-Western, a part of Cengage Learning. All rights reserved. Exhibit 4-7 Real versus Nominal GDP

Copyright© 2008 South-Western, a part of Cengage Learning. All rights reserved. Exhibit 4-8 Real versus Nominal GDP

Copyright© 2008 South-Western, a part of Cengage Learning. All rights reserved. Exhibit 4-9 Deriving the Price Index: Base Year = 2000

Copyright© 2008 South-Western, a part of Cengage Learning. All rights reserved. Exhibit 4-10 Calculating Real GDP Using Nominal GDP and Price Index

Copyright© 2008 South-Western, a part of Cengage Learning. All rights reserved. Exhibit 4-11 U.S. Nominal GDP, GDP Price Index, and Real GDP, 1980–2005 Source: Bureau of Economic Analysis, National Economic Accounts, gdp.htm (accessed March 28, 2006).

Copyright© 2008 South-Western, a part of Cengage Learning. All rights reserved. Exhibit 4-12 Recessions and Expansions During the Business Cycle

Copyright© 2008 South-Western, a part of Cengage Learning. All rights reserved. Exhibit 4-13 Procyclical, Countercyclical, and Acyclical Macroeconomic Variables

Copyright© 2008 South-Western, a part of Cengage Learning. All rights reserved. Exhibit 4-14 Leading Indicators Worldwide, May 30, 2006 Source: The Conference Board, (accessed May 30, 2006).

Copyright© 2008 South-Western, a part of Cengage Learning. All rights reserved. Exhibit 4-15 U.S. Leading Economic Indicators Source: The Conference Board, ‘‘Leading Economic Indicators and Related Composite Indexes,’’ (accessed January 21, 2006).

Copyright© 2008 South-Western, a part of Cengage Learning. All rights reserved. Exhibit 4-16 U.S. Recessions and Movements in U.S. Real GDP: 1947 (I) To 2006 (II) Source: Data from Federal Reserve Bank of St. Louis, Economic Data—FRED, (accessed September 6, 2006).

Copyright© 2008 South-Western, a part of Cengage Learning. All rights reserved. Exhibit 4-17 U.S. Business Cycle Expansions and Contractions: 1945–2006 Source: National Bureau of Economic Research, ‘‘Business Cycle Expansions and Contractions,’’ (accessed September 6, 2006).

Copyright© 2008 South-Western, a part of Cengage Learning. All rights reserved. Exhibit 4-18 Differences in Business Cycles: 1947–1982 versus 1982–2006