Topic Two: Measurement of Economic Performance 1 Jan 7 Introduction to Macroeconomics Macroeconomic Issues Leading Indicators 2 10 3 11 GDP measurement: Worksheet on GDP Econ U$A GDP and questions Measurement issues with GDP 4 12 Income Approach 13 Worksheet on Income approach Nominal vs. Real GDP 5 GDP Deflator Worksheet For the long weekend: Count it Up! Activity Quiz on Chapter 6 6 7 18 19 Late Start 8 20 9 21 Types and measurement of Unemployment Worksheet on Unemployment 10 11 24 25 12 13 26 27 Okun’s Law and its implications of GDP gap Inflation income and output effects of inflation Activity: Who Gains, Who Loses from Inflation Quiz on Chapter 7 Review materials 14 28 Business Cycles Cycles 1900-1990 Waves of Innovation US Productivity Growth ECON U$A Booms and Busts Discussion questions A brief history of economic thinking Topic Test Unit 2 Chapter 6 and 7 Required Assignments: 1. 2. 3. 4. 5. 6. 7. 8. Homework Triple Plays Count it UP! Last Word 6 Questions (on Blog) Last Word 7 Questions (on Blog) Data Hunt assignment Free Response #2 Quizzes: chapter 6, 7, Unit 2 Test Read Chapter 6, p. 105-123 in conjunction with the study guide pages Examine and study Figure 6.3 Read Chapter 7, p. 125-145 in conjunction with the study guide pages Examine and study: Figures 7.1 7.2 7.3 7.5 Study materials for Unit Test Measurement of Economic Performance Topic I: Gross Domestic Product and National Income Concepts A. Measuring GDP, 4-Sector Circular Flow Model, and Flow versus Stock 1. Expenditure Approach [C+I+G+(XIM)] where C = Personal Consumption Expenditures I = Gross Private Investment G = Government Consumption Expenditures and Gross Investment X-IM = Net Exports 2. Income Approach (W+I+R+P) where W = Compensation of Employees I = Net Interest R = Rental Income of Persons P = Profits (Non-income adjustments) 3. Problems with calculating GDP— Nonmarket transactions, distribution, kind and quality of products. 4. Changing Nominal GDP (NGDP) to Real GDP (RGDP). How and why? 5. Other national accounts: Net National Product (NNP), National Income (NI), Personal Income (PI), and Disposable Income (DI). Topic II: Unemployment and Business Cycles A. The Roller Coaster — The four phases of the business cycle B. Total Spending and How It Affects the Business Cycle C. Unemployment — Defined D. Problems with the Unemployment Rate — Who is counted and who isn’t? E. Types of Unemployment 1. Seasonal, frictional, structural, cyclical 2. Which type(s) affect the unemployment rate? F. Full Employment — What is it? What are the implications if achieved? G. The GDP Gap — Explaining lost potential Topic III: Inflation A. The Meaning and Measurement of Inflation B. The Consumer Price Index (CPI) and How It Is Computed C. Problems with the CPI D. Other Indexes: Producer Price Index E. Consequences of Inflation: shrinking incomes, changes in wealth, effect on interest rates F. Demand-Pull and Cost-Push Inflation Key concepts 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Describe the macroeconomic performance in the United States and other countries-GDP, inflation, unemployment and other indicators Define Gross Domestic Product by expenditure and income approaches Distinguish between nominal GDP and real GDP Explain the limitations of GDP measures in terms of well-being. Define unemployment; list sources and types Define labor force participation rate and calculate the unemployment rate Define the full employment level of GDP Distinguish between actual and potential GDP Explain the calculation of price indices—GDP deflator, CPI, PPI Use price indices to calculate real wages and real interest rates Graphs to be included in Index Card Stack: 1. Circular flow diagram showing firms, households, and government. Rest of the world may be included as an option. 2. Demand pull inflation model.