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ECONOMIC VITAL SIGNS

ECONOMIC VITAL SIGNS. DIAGNOSING THE HEALTH OF OUR NATION’S ECONOMIC SYSTEM. THREE MAIN ECONOMIC INDICATORS. REAL GROSS DOMESTIC PRODUCT (GDP) THE INFLATION RATE THE UNEMPLOYMENT RATE. MEASURES THE OUTPUT OF FINAL GOODS AND SERVICES IN CONSTANT DOLLARS

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ECONOMIC VITAL SIGNS

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  1. ECONOMIC VITAL SIGNS

    DIAGNOSING THE HEALTH OF OUR NATION’S ECONOMIC SYSTEM
  2. THREE MAIN ECONOMIC INDICATORS REAL GROSS DOMESTIC PRODUCT (GDP) THE INFLATION RATE THE UNEMPLOYMENT RATE MEASURES THE OUTPUT OF FINAL GOODS AND SERVICES IN CONSTANT DOLLARS MEASURES HOW RAPIDLY THE OVERALL NATIONAL PRICE LEVEL IS CHANGING MEASURES THE PERCENTAGE OF THE LABOR FORCE THAT WISHES TO WORK BUT ARE JOBLESS.
  3. Business Cycles Four Phases of the Business Cycle PEAK PEAK GROWTH TREND Expansion Contraction Expansion Contraction Level of business activity TROUGH Trough Time
  4. FOUR PHASES OF THE BUSINESS CYCLE EXPANSION: GDP IS GROWING, CONSUMERS ARE SHOPPING, EMPLOYMENT IS IMPROVING AND PRICES ARE RISING PEAK: HIGH POINT WHERE GDP STOPS GROWING, PRICES ARE AT THEIR HIGHEST AND UNEMPLOYED WORKERS ARE HARD TO FIND U.S. ECONOMIC GROWTH PER PERSON
  5. FOUR PHASES OF THE BUSINESS CYCLE CONTRACTION: GDP IS SHRINKING, CONSUMERS ARE NOT SHOPPING, PRICES ARE FALLING AND WORKERS ARE LOSING JOBS TROUGH: DEMAND, PRODUCTION AND UNEMPLOYMENT ARE AT THEIR LOWEST POINT PEAKS AND TROUGHS ARE CORNERS FIVE CONSECUTIVE QUARTERS OF NEGATIVE GDP GROWTH IN 2008-09
  6. THE SHAPE OF THE BUSINESS CYCLE “V” SHAPED: MOST DESIREABLE, INDICATES A QUICK REBOUND TO RECOVERY “U” SHAPED: ECONOMY CONTRACTS BUT STRUGGLES TO RECOVER EXPERIENCING ANEMIC GROWTH FOR A WHILE “W” SHAPED: INDICATES A DOUBLE DIP RECESSION WHERE RECOVERY IS FLEETING BEFORE A SECOND CONTRACTION “L” SHAPED: THE GREAT DEPRESSION, YEARS OF A STAGNANT ECONOMY WITH NO RESPONSE TO REMEDIES.
  7. WHAT CAUSES THE BUSINESS CYCLE TO TURN A CORNER? EXTERNAL EVENTS LIKE INNOVATIONS, WARS, OR POLITICAL EVENTS
  8. WHAT CAUSES THE BUSINESS CYCLE TO TURN A CORNER? "liquidate labor, liquidate stocks, liquidate farmers, liquidate real estate… it will purge the rottenness out of the system.” Consumer Confidence plummeted and the winds of contraction accelerated to unprecedented speeds. On Aug. 15, 1971, in a nationally televised address, Nixon announced, “I am today ordering a freeze on all prices and wages throughout the United States.” “Ranchers stopped shipping their cattle to the market, farmers drowned their chickens, and consumers emptied the shelves of supermarkets.” GOVERNMENT REGULATION
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