Chapter 2 Consumer Price Index – Measures the changes
in price level of goods and services typically
The Data of Macroeconomics
Key Concepts
Gross Domestic Product (GDP) – is the market
value of all final goods and services produced
domestically within a given period of time.
National Income Accounting – The accounting
system used to measure GDP and many related
statistics.
Stocks – A quantity measured at a given point
in time
Flow – A quantity measured per unit of time
Value Added = Value of the firm’s output –
Value of Intermediate Goods that it purchases
Imputed Value – Estimated value of goods and
services that do not have market price.
Nominal GDP – Value of goods measured at a
current price.
Real GDP – Value of goods measured using a
constant price.
GDP Deflator – Measures the price of output
relative to its price in the base year.
National Income Accounts – Y = C + I + G + NX
Consumption – Goods and services bought by
the household
Investment – Purchases of goods for future
uses
Government Purchases – Goods and services
bought by federal state and local government.
Net Export – Accounts for trade with other
countries.
bought by household.
Labor Force – Sum of employed and
unemployed
Unemployment Rate – Percentage of labor
force that is unemployed
Labor Force Participation Rate - Percentage of
adult population in the labor force
Questions for Review
1. GDP measures two things, the income
of everyone in the economy and the
expenditure of everyone in the
economy. GDP can measure these two
things at once because basically they
are the same, for an economy as a
whole, income must equal to
expenditure.
2. Consumer Price Index measures the
overall changes in price level of fixed
basket of goods and services that are
typically bought by
consumers/households.
3. The three categories used by the BLS to
classify everyone in the economy are:
- Employed
- Unemployed
- Not in the Labor Force
4. The two ways the BLS describes
measures total employment is by using
the Household Survey and the
Establishment Survey.