2. Gross Domestic Product Total dollar value of goods and services produced in a country during one year.

4. 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

5. CPI – Consumer Price Index The price of a selection of goods and services purchased by a “typical consumer”.

6. Inflation  A general rise in the level of prices of goods and services over a period of time. –Change in CPI

7. 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?

8. 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

10. Period of economic growth  GDP Increases  Unemployment generally decreases  Inflation generally increases

11. Highest level of economic activity  GDP stops increasing  Unemployment stops decreases  Inflation stops increases and may start decreasing

12. Period of economic decline  GDP decreases  Unemployment increases  Inflation generally decreasing

13. Lowest level of economic activity  GDP stops decreases to lowest levels  Unemployment is at its highest levels  Inflation stops decreasing and may start increasing

14. Expansion :  Rising prices, GDP rises, jobs growth Expansion

15. Peak :  A period of prosperity, growth stops Expansion Peak

16. Contraction :  Unemployment rises, consumer spending low, profits low- 6m to a year Inflation Peak Contraction

17. Trough :  Long term major slowdown, unemployment soars, firms fail. Inflation Peak Recession Trough

18.  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!

19. Create a poster illustrating each phase of the business cycle. Each phase should include:  Events that might occur  Mood of consumers & businesses  Pictures