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Measuring the Economy.

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Presentation on theme: "Measuring the Economy."— Presentation transcript:

1 Measuring the Economy

2 Measuring the Economy Economies fluctuate through periods of prosperity and periods of struggle Economic growth benefits everyone Businesses are producing more goods and services More workers are hired People have more money to buy goods and services Gross Domestic Product (GDP)- the dollar value of all goods and services produced in a country in a year The economy fluctuates , but not at a constant rate.

3 Business Cycle- alternating intervals of growth and decline in an economy

4 Business Cycle Begins with expansion leading to an economic peak
Expansion- economy is growing (new businesses, more production, employment) Peak- highest point of the business cycle, period of prosperity Eventually the economy levels off and begins to contract into trough Contraction- economy is slowing (businesses slow, less production, less employment) Trough- lowest point of the business cycle, period of recession or depression The economy then moves back up with expansion

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7 Recession- when the economy goes down for at least 6 straight months
Depression- long standing recession (several years, large number of people out of work, shortages, etc.) Unemployment Rate- percent of people in the labor force not working and looking for a job

8 Inflation Inflation- increase in the general level of prices
Hurts the economy because it reduces purchasing power (a dollar doesn’t buy as much today as it did 10 years ago) Inflation typically goes up overtime (it does not usually increase by a lot in a short period of time) Consumer Price Index (CPI)- prices of 400 commonly used goods tracked by the US government to measure inflation


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