Measures of Performance
By: Yassmin Benbouchaib and Darius Smith
The Circular Flow Model
Accounting for Output and Income
value of production
Gross Domestic Product
GDP = C + I + G + ( X - M ) = Aggregate spending.
Real and Nominal GDP
- Nominal GDP: A gross domestic product (GDP) figure that has not been adjusted for inflation.Also known as "current dollar GDP" or "chained dollar GDP."
- Real GDP: An inflation-adjusted measure that reflects the value of all goods and services produced in a given year, expressed in base-year prices. Often referred to as "constant-price," "inflation-corrected" GDP or "constant dollar GDP"
Inflation/the Consumer Price Index
Inflation- The annual rate of inflation on goods consumed by the typical consumer is the percentage change in the CPI from one year to the next.
-Because GDP includes more than just consumer goods, the index is a broader measure of inflation, while the CPI is a measure of inflation of only consumer goods.
Measuring the Unemployment Rate
- Labor Force = Employment + Unemployment
- Unemployment Rate = ( Unemployment / Labor Force ) x 100
-the unemplyment rate is the ratio of unemployed to the total labor force.
Questions
What is the size of the labor force?
Total Population: 2,000
Total employed adults: 950
Total unemployed adults: 50
What is the unemployment rate?
Total Population: 2,000
Total employed adults: 950
Total unemployed adults: 50
What type of unemployment defines someone who quits their job and began looking for a new job at a competing grocery store?
A. Cyclical
B. Structural
C. Seasonal
D. Frictional
E. Discouraged
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