Rasmussen Why Gross Domestic Product Is Used as A Key Economic Indicator Questions

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What are the four phases of the business cycle?Which phase of the business cycle would be the best time to purchase a large ticket item?How do you calculate the labor force participation rate?Who is accounted for in our country’s labor force?How is our country’s unemployment rate calculated?In one to two sentences, please define the term, “full employment?”In one to two sentences, what is a discouraged worker?What are the four types of unemployment?Which type of unemployment is the direct cause of our country (economy) contracting?In one to two sentences, please define, inflation?What does Gross Domestic Product (GDP) measure?What is the equation used to calculate Gross Domestic Product (GDP)?In two or more sentences describe the difference between Real Gross Domestic Product (GDP) and Nominal Gross Domestic Product?Identify at least three (3) factors that are omitted from our country Gross Domestic Product (GDP)?In one to two sentences, please define, the Human Development Index (HDI)?In one to two sentences, describe why Gross Domestic Product (GDP) is used as a key economic indicator?In two or more sentences describe what assumptions can be made about country’s that have a high Gross Domestic Product (GDP)?How is Gross Domestic Product (GDP) per capita calculated?If Real Gross Domestic Product (GDP) fall for two or more consecutive quarters, which phase of the business cycle would best describe our economy?In one to two sentences describe whether Real Gross Domestic Product (GDP) or Gross Domestic Product (GDP) is a better measure of our country’s well-being?

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Four phases of the business cycle consist of:
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A depression phase
A recessionary phase
Recovery phase
An expansionary phase
During a recessionary phase of the business cycle would be the most
desirable time to purchase large ticket items due to lower levels of inflation
and interest rates.
During an expansionary phase of the business cycle would be the least
desirable time to purchase large ticket items due to higher levels of inflation
and interest rates.
Our labor force is consisted of both employed and unemployed workers.
Labor Force Participation Rate (LFPR) =
The term “full employment” implies that all willing and able people who can
work are actively engaged in the labor force. “Full employment” suggests that
our country’s unemployment rate is between 3-6%. Our country will never
achieve zero-percent unemployment since our economy will always
experience a natural rate of unemployment.
Natural Rate of Unemployment = Frictional unemployment + Structural
unemployment
Frictional unemployment are workers who are unemployed, but they have
transferable job skills and they are in-between jobs.
Structural unemployment are workers who have mismatched job skills.
Discouraged workers are workers who have been out of work for four or more
weeks. These individuals are not applying for open positions, are not
registered at their local job service, and are not going on any interviews. They
have become very discouraged and have left the labor force.
Unemployed workers are applying for open positions, are going on interviews,
and are registered at their local job service. They are actively seeking
employment.
Employed workers can range from workers who work from 1-hour to 40hours plus per week.
Four causes of unemployment include:
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Job losers
Job leavers
Re-entrants
New entrants
Four types of unemployment:
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Seasonal unemployment
Frictional unemployment
Structural unemployment
Cyclical unemployment
Inflation is defined as an increase in overall prices across the board.
Gross Domestic Product (GDP) is defined and the sale of final goods
produced within a country’s borders over a specified time-frame.
GDP = C + I + G + NX
Where, C = Consumption; I = Investment; G = Government Spending, and; NX
= Net Exports (Exports – Imports).
Real GDP accounts for inflation and fluctuations within our economy.
Nominal GDP is the dollar amount assignment to the sale of final goods and
services within our countries borders, or it can be written as:
? = P (Price) * Q (Quantity)
GDP is used as a key economic indicator as it provides a bird’s eye view of
our economy and GDP is used to measure one country against others. GDP
provides an economic synopsis of a country.
GDP follows our country’s business cycle; for example, during an
expansionary phase of the business cycle in which interest rates and
inflation are at higher levels it would be undesirable to purchase large ticket
items. Whereas, during a recessionary phase of the business cycle in which
interest rates and inflation are lower levels would be the best time to
purchase large ticket items.
GDP does not account for the following items:
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Leisure time
Happiness
Goods sold second hand
Domestic production
Goods and services sold on the black market
Human Development Index (HDI) is used to measure the social aspects of
domestic consumers. The HDI measure social factors such as life
expectancies, per capita income, and levels of education. One can view GDP
as the economic indicator looking at our economy and, the HDI at a lower
level by looking at the social well-being of domestic consumers.

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Gross domestic product

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