Economics

Unemployment, GDP, Inflation

GDP

Gross domestic product is one of the primary indicators used to gauge the health of a country's economy. it represents the total dollar value of all goods and services produced over a specific time period. GDP is expressed as a comparison to the previous quarter or year.


EXAMPLE: if the year to year GDP is up 3%, this is thought to mean that the economy has grown by 3% over the last year.

Inflation

Inflation is the rate which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling. Central banks attempt to stop serve inflation, along with severe deflation, in an attempt to keep excessive growth of prices to a minimum.


EXAMPLE: A 4.4-pound bag of "extra-fancy" grade Golden Delicious apples. The goods and services fall into eight major categories: food and beverage, housing, apparel, transportation, medical care, recreation, education and communication, and other. The BLS (Bureau of Labor Statistics) updates the market basket every few years to remove obsolete items; the last update occurred during 2001 and 2002.

Unemployment

A person who is actively searching for employment is unable to find work. Unemployment is often used as a measure of the health of the economy. The most frequently cited measure of unemployment is the unemployment rate. This is the number of unemployed persons divided by the number of people in the labor force. Economists generally distinguish between three types of unemployment. Frictional which exists when a lack of information prevents workers and employers from becoming aware of each other. It is usually a side effect of the job-search process, and may increase when unemployment benefits are attractive. Structural occurs when changing markets or new technologies make the skills of certain workers obsolete. And finally, Cyclical which is a result of the cyclical nature of the economy and occurs whenever there is a general downturn in business activity.


EXAMPLE: In December 2012, 143,060 thousand of US residents were employed and 11,844 thousand were unemployed.

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Frequently Asked Questions


  • What is Hyper-inflation? Hyper inflation is a runaway inflation or "out of control" inflation
  • Is GDP measured the same across all countries? The UK National Accounts including GDP are complied using the European System of Account 1995 (ESA95) which itself is based on the System of National Accounts 1993 (SNA93). These systems are recognized worldwide and are adhered to by the majority of countries.
  • Can I get unemployment if i quit? When you quit your job, you are not eligible for unemployment, however if you left for a good reason you may be eligible for unemployment benefits.

How They All Relate to GDP

Inflation is the primary and negative factor of all economic troubles including GDP, because it lowers consumerism, promote unemployment, and reduce import and export.

Unemployment rates are linked in the sense that both are macroeconomic factors that are used to gauge the state of an economy.