1. ECONOMIC MEASUREMENTS Unit 2, Part 2
Chapter 4
1/12/2019
ECONOMIC MEASUREMENTS Unit 2, Part 2
Explain how gross domestic product (GDP), GDP per capita, and labor productivity are used as measurements of economic performance.
Describe the four phases of the business cycle.
Define inflation and deflation.

2. MEASURING ECONOMIC GROWTH
Chapter 4
1/12/2019
MEASURING ECONOMIC GROWTH
Gross domestic product (GDP) – total value of all final goods and services produced in the US in one year
Real GDP – removing the effects of inflation to compare years
GDP per capita – each person’s share (total GDP divided by # of people in population)
Labor productivity
Consumer Price Index (CPI) – compares prices of one year to a base year.

3. GROSS DOMESTIC PRODUCT (GDP)
Chapter 4
1/12/2019
GROSS DOMESTIC PRODUCT (GDP)
Three major categories of expenditures
What consumers spend for food, clothing, and housing
What businesses spend for buildings, equipment, and supplies
What government agencies spend to pay employees and buy supplies

4. THE BUSINESS CYCLE Prosperity – high point
Chapter 4
1/12/2019
THE BUSINESS CYCLE
Prosperity – high point
Recession – GPD slows for 2 or more consecutive quarters
Depression – low point
Recovery - GDP begins to increase again

5. INFLATION AND DEFLATION
Chapter 4
1/12/2019
INFLATION AND DEFLATION
Inflation is a sustained increase in the general level of prices.
High inflation – wages can’t keep up
Mild inflation (2-3%) – stimulates the economy
Deflation means a decrease in the general level of prices.