Economic Growth
If nominal GDP increases by 6% and the inflation rate is 2%, what is the approximate real GDP growth rate?
Understates true unemployment
What is the Consumer Price Index (CPI) primarily used for?
Measuring GDP growth
Value of goods/services adjusted for inflation.
Real GDP
Unemployment caused by changes in demand market structure
structural unemployment
Not in the GDP
If the unemployment rate is 8% and many workers are discouraged, the reported unemployment rate:
understate the true level of joblessness
Which of the following is a type of structural unemployment?
A factory worker losing their job due to automation
Alternating period of economic expansion and contraction
The Business Cycle
High inflation and stagnant economic growth.
stagflation.
A business builds a new factory.
investment
Identify the GDP sector:
Bill purchases a new stove for his family
Consumption
The government increases defense spending.
Goverment spending
A U.S. company imports raw materials from China.
imports
A bakery purchases an industrial oven.
investment
Economic activity reaches its highest point.
peak
GDP begins to recover from a recession.
Expansion
Identify the GDP sector:
Starbucks purchases land for a new franchise to open
Business Investment
Unemployment is at its lowest point.
Trough
Consumer spending rises, and businesses increase investments.
recession
Used to measure economic growth with current market prices
Nominal GDP