Name: ____________________________ Date: ______________ Block:_______ Measuring the Economy Reading Notes Assignment Read Lesson 13 on www.LearnTCI.com; as you read each section please complete the following items. Section 2 1. Provide an example of an economic activity included in GDP, and explain why it is included. Also give an example of an economic activity not included in GDP, and explain why it is not included. 2 2. What is the formula for calculating GDP? Please explain each component of the formula. 3 3. Define each of the following types of GDP and how each type is measured. • Nominal GDP • Real GDP • Per Capita GDP 4 4. Which of the types of GDP would an economist use to compare GDP from various time periods, and why? 5 5. Which type would an economist use to compare the GDP of various countries, and why? 6 6. Do you think GDP is a good measure of economic health? Why or why not? Section 3 7. What is the formula for calculating the unemployment rate? 8. Give a definition of each type of unemployment and provide an example of each type. 3 9. Which type of unemployment do you think is most associated with an unhealthy economy? Why? 10. Do you think the unemployment rate is a good measure of economic health? Why or why not? Section 4 11. Explain how to calculate the inflation rate using the consumer price index. How do economists use this information to determine whether higher prices mean that things cost more than they used to? 2 12. Define each of the following terms. Also explain how each term is measured. • Nominal cost of living • Real cost of living • Nominal wages • Real wages 3 13. For each of the three types of inflation, give a definition, an example, and a summary of its effects. 4 14. What are the main causes of inflation? 5 15. Explain how the wage-price spiral contributes to the inflation rate. 6 16. Do you think the inflation rate is a good measure of economic health? Why or why not? Section 5 17. Identify and give a definition for each phase of the business cycle. 18. Illustrate the business cycle and label each phase. 2 19. Why might an economy stop expanding and start contracting? 4 20. What is the difference between a recession and a depression?