a piece of economic data (statistic) indicates the direction of an economy
TRANSCRIPT
![Page 1: A piece of economic data (statistic) indicates the direction of an economy](https://reader033.vdocument.in/reader033/viewer/2022051214/56649f1c5503460f94c32ff2/html5/thumbnails/1.jpg)
ECONOMIC INDICATORSTo demonstrate awareness of key
macroeconomic indicators
![Page 2: A piece of economic data (statistic) indicates the direction of an economy](https://reader033.vdocument.in/reader033/viewer/2022051214/56649f1c5503460f94c32ff2/html5/thumbnails/2.jpg)
DEFINITION
A piece of economic data (statistic) indicates the direction of an economy.
![Page 3: A piece of economic data (statistic) indicates the direction of an economy](https://reader033.vdocument.in/reader033/viewer/2022051214/56649f1c5503460f94c32ff2/html5/thumbnails/3.jpg)
USES:
used by investors to understand present or future investment possibilities
Used by economists to judge the overall health of an economy.
![Page 4: A piece of economic data (statistic) indicates the direction of an economy](https://reader033.vdocument.in/reader033/viewer/2022051214/56649f1c5503460f94c32ff2/html5/thumbnails/4.jpg)
EXAMPLES
Inflation rate (CPI) Production activity (GDP) Unemployment figures Standards of living (HDI)
![Page 5: A piece of economic data (statistic) indicates the direction of an economy](https://reader033.vdocument.in/reader033/viewer/2022051214/56649f1c5503460f94c32ff2/html5/thumbnails/5.jpg)
KEY MACRO ECONOMIC INDICATORS
GDP GNP NNP HDI CPI (inflation) Unemployment Trade position
![Page 6: A piece of economic data (statistic) indicates the direction of an economy](https://reader033.vdocument.in/reader033/viewer/2022051214/56649f1c5503460f94c32ff2/html5/thumbnails/6.jpg)
Gross Domestic Product
the total value of goods and services produced in a country during one year.
![Page 7: A piece of economic data (statistic) indicates the direction of an economy](https://reader033.vdocument.in/reader033/viewer/2022051214/56649f1c5503460f94c32ff2/html5/thumbnails/7.jpg)
GR
OS
S D
OM
ES
TIC
PR
OD
UC
T
So what does this
mean???
![Page 8: A piece of economic data (statistic) indicates the direction of an economy](https://reader033.vdocument.in/reader033/viewer/2022051214/56649f1c5503460f94c32ff2/html5/thumbnails/8.jpg)
GDP
C =Household Consumption
G =Government Spending
I = gross private investment
(X - M) = the net exports
GDP is a number that shows the worth (value)of the output of a country in local currency
GDP = C + G + I + (X - M)
![Page 9: A piece of economic data (statistic) indicates the direction of an economy](https://reader033.vdocument.in/reader033/viewer/2022051214/56649f1c5503460f94c32ff2/html5/thumbnails/9.jpg)
Some Notes on GDP
It measures the value of economic activity within a country in one year..
It helps investors and economists understand business cycles
so
![Page 10: A piece of economic data (statistic) indicates the direction of an economy](https://reader033.vdocument.in/reader033/viewer/2022051214/56649f1c5503460f94c32ff2/html5/thumbnails/10.jpg)
UNDERSTANDING GDP
NOMINAL GDP
REAL GDP
GDP PER CAPITA
What is the
difference?
![Page 11: A piece of economic data (statistic) indicates the direction of an economy](https://reader033.vdocument.in/reader033/viewer/2022051214/56649f1c5503460f94c32ff2/html5/thumbnails/11.jpg)
NOMINAL GDP REAL GDP GDP PER CAPITA
Nominal GDP is the market value (money-value) of all final goods and services produced in a geographical region, usually a country
Real GDP is a measure of the value of output economy, adjusted for price changes (it takes into account inflation)
GDP per capita = GDP per person ….. __GDP___ population = the amount of GDP that each individual gets
![Page 12: A piece of economic data (statistic) indicates the direction of an economy](https://reader033.vdocument.in/reader033/viewer/2022051214/56649f1c5503460f94c32ff2/html5/thumbnails/12.jpg)
GDPPURPOSE: (Why is it important)?
• It gauges the health of the economy• It indicates economic growth• WHEN GDP is HIGH• >>> HIGHER PRODUCTION LEVELS >>> LOW UNEMPLOYMENT >>> HIGHER WAGES (Demand for labour is high) >>> GREATER SPENDING
![Page 13: A piece of economic data (statistic) indicates the direction of an economy](https://reader033.vdocument.in/reader033/viewer/2022051214/56649f1c5503460f94c32ff2/html5/thumbnails/13.jpg)
Gross National Product
An economic statistic that includes GDP, plus any income earned by residents from overseas investments, minus income earned within the domestic economy ...
GNP = C + G + I + NX +NFP
![Page 14: A piece of economic data (statistic) indicates the direction of an economy](https://reader033.vdocument.in/reader033/viewer/2022051214/56649f1c5503460f94c32ff2/html5/thumbnails/14.jpg)
The difference between GDP and GNP
GNP is the sum value of all goods and services
produced by permanent residents of a country
regardless of their location
![Page 15: A piece of economic data (statistic) indicates the direction of an economy](https://reader033.vdocument.in/reader033/viewer/2022051214/56649f1c5503460f94c32ff2/html5/thumbnails/15.jpg)
SO it means ….
GNP means the total of all business production and service sector industry in a country plus its gain on overseas investment.
![Page 16: A piece of economic data (statistic) indicates the direction of an economy](https://reader033.vdocument.in/reader033/viewer/2022051214/56649f1c5503460f94c32ff2/html5/thumbnails/16.jpg)
DIF
FER
EN
CE B
ETW
EEN
G
DP
AN
D G
NP
GD
PG
NP
Measuring all income earned within a country, or by measuring all expenditures within the country
Read more: http://www.investorwords.com#ixzz3E6xk9h18
GDP, plus income from foreign sources, less income paid to foreign citizens and entities
Read more: http://www.investorwords.com#ixzz3E6xuyviq
![Page 17: A piece of economic data (statistic) indicates the direction of an economy](https://reader033.vdocument.in/reader033/viewer/2022051214/56649f1c5503460f94c32ff2/html5/thumbnails/17.jpg)
WHY is it IIMPORTANT?
It measures both the size and direction of economic activity (growth, stagnation or contraction)
Shows the relative strength of the nations economy compared to that of other nations
![Page 18: A piece of economic data (statistic) indicates the direction of an economy](https://reader033.vdocument.in/reader033/viewer/2022051214/56649f1c5503460f94c32ff2/html5/thumbnails/18.jpg)
NNP Net National Product
What it is:
Net National Product (NNP) is the market value of a nation's goods and services minus depreciation (often referred to as capital consumption).
![Page 19: A piece of economic data (statistic) indicates the direction of an economy](https://reader033.vdocument.in/reader033/viewer/2022051214/56649f1c5503460f94c32ff2/html5/thumbnails/19.jpg)
NNP = Gross National Product – Depreciation
Depreciation measures the amount of GNP that must be spent on new capital goods to
maintain the existing physical stock.
FORMULA
DEPRECIATION …Consumption of
fixed capital
![Page 20: A piece of economic data (statistic) indicates the direction of an economy](https://reader033.vdocument.in/reader033/viewer/2022051214/56649f1c5503460f94c32ff2/html5/thumbnails/20.jpg)
CAPITAL CONSUMPTION ALLOWANCE
• amount of depreciation included in the Gross Domestic Product (GDP).
• • normally around 11% of GDP.
• * This amount is subtracted from GDP, (it is "used up“ during the year.
![Page 21: A piece of economic data (statistic) indicates the direction of an economy](https://reader033.vdocument.in/reader033/viewer/2022051214/56649f1c5503460f94c32ff2/html5/thumbnails/21.jpg)
SO…
This amount is subtracted from GDP. WHY?• it is needed to
maintain the productive capacity of the economy
Productive capacity is maximu
m output
![Page 22: A piece of economic data (statistic) indicates the direction of an economy](https://reader033.vdocument.in/reader033/viewer/2022051214/56649f1c5503460f94c32ff2/html5/thumbnails/22.jpg)
WHY it matters…
NNP is a measure of how much a country can consume in a given period.
the total value of a nation's annual output of goods and services minus the value of capital goods used up in the production of this output
![Page 23: A piece of economic data (statistic) indicates the direction of an economy](https://reader033.vdocument.in/reader033/viewer/2022051214/56649f1c5503460f94c32ff2/html5/thumbnails/23.jpg)
HUMAN DEVELOPMENT INDEX (HDI)
to measure and rank countries' levels of social and economic development
based on four criteria- life expectancy, - education, and - income- standard of living
![Page 24: A piece of economic data (statistic) indicates the direction of an economy](https://reader033.vdocument.in/reader033/viewer/2022051214/56649f1c5503460f94c32ff2/html5/thumbnails/24.jpg)
HDITHE HDI MAKES IT POSSIBLE TO:• track changes in development levels
over time and • compare development levels in
different countries.
Why is it importan
t ?
![Page 25: A piece of economic data (statistic) indicates the direction of an economy](https://reader033.vdocument.in/reader033/viewer/2022051214/56649f1c5503460f94c32ff2/html5/thumbnails/25.jpg)
A COMPARISON
![Page 26: A piece of economic data (statistic) indicates the direction of an economy](https://reader033.vdocument.in/reader033/viewer/2022051214/56649f1c5503460f94c32ff2/html5/thumbnails/26.jpg)
![Page 27: A piece of economic data (statistic) indicates the direction of an economy](https://reader033.vdocument.in/reader033/viewer/2022051214/56649f1c5503460f94c32ff2/html5/thumbnails/27.jpg)
Why do many countries with a high gross domestic product end up with human development index ratings lower than other developed nations with lower GDPs?
1. It's difficult to balance spending on things that increase HDI while being an international GDP leader.
2. The pursuit of wealth affects HDI negatively.
3. It's very difficult for any people or government to achieve gains in all areas of life.
![Page 28: A piece of economic data (statistic) indicates the direction of an economy](https://reader033.vdocument.in/reader033/viewer/2022051214/56649f1c5503460f94c32ff2/html5/thumbnails/28.jpg)
CONSUMER PRICE INDEX (CPI)
A measure of changes in the purchasing-power of a currency and the rate of inflation.
CPI measures:1) price changes 2) cost of living
changes.
![Page 29: A piece of economic data (statistic) indicates the direction of an economy](https://reader033.vdocument.in/reader033/viewer/2022051214/56649f1c5503460f94c32ff2/html5/thumbnails/29.jpg)
USED BY:
Government Business Labour Private citizens
![Page 30: A piece of economic data (statistic) indicates the direction of an economy](https://reader033.vdocument.in/reader033/viewer/2022051214/56649f1c5503460f94c32ff2/html5/thumbnails/30.jpg)
USES
Used to measure inflation Guides the president when making
economic decisions
Shows the effectiveness of government policy
Shows trends to help formulate future fiscal and monetary policy
![Page 31: A piece of economic data (statistic) indicates the direction of an economy](https://reader033.vdocument.in/reader033/viewer/2022051214/56649f1c5503460f94c32ff2/html5/thumbnails/31.jpg)
CPI CPI is used to
calculate the actual inflation rate,,, HOW?
CPI is one of the most frequently used statistics for identifying periods of inflation or deflation.
![Page 32: A piece of economic data (statistic) indicates the direction of an economy](https://reader033.vdocument.in/reader033/viewer/2022051214/56649f1c5503460f94c32ff2/html5/thumbnails/32.jpg)
CPI FORMULA
CPI = Current year Price --------------------------- x100 Base year price
INFLATION = CPI current year – CPI previous year
--------------------------------------------------- X 100 CPI previous year
![Page 33: A piece of economic data (statistic) indicates the direction of an economy](https://reader033.vdocument.in/reader033/viewer/2022051214/56649f1c5503460f94c32ff2/html5/thumbnails/33.jpg)
What does it mean?
It tells us how much cost of living has risen due to price changes
What does this show?
![Page 34: A piece of economic data (statistic) indicates the direction of an economy](https://reader033.vdocument.in/reader033/viewer/2022051214/56649f1c5503460f94c32ff2/html5/thumbnails/34.jpg)
CO
NS
UM
ER
PR
ICE IN
DEX
(CPI)
The consumer price index or CPI is a
more direct measure than per
capita GDP of the
standard of living in a country
![Page 35: A piece of economic data (statistic) indicates the direction of an economy](https://reader033.vdocument.in/reader033/viewer/2022051214/56649f1c5503460f94c32ff2/html5/thumbnails/35.jpg)
GDP vs CPI ????
reflects prices of all goods and services produced within the country, whereas CPI reflects the prices of a representative basket of goods and services purchased by the consumer
The CPI measures changes in prices over time while the GDP measures changes in production.
![Page 36: A piece of economic data (statistic) indicates the direction of an economy](https://reader033.vdocument.in/reader033/viewer/2022051214/56649f1c5503460f94c32ff2/html5/thumbnails/36.jpg)
UNEMPLOYMENT RATE
is a measure of the percentage of unemployed workers in the workforce.
![Page 37: A piece of economic data (statistic) indicates the direction of an economy](https://reader033.vdocument.in/reader033/viewer/2022051214/56649f1c5503460f94c32ff2/html5/thumbnails/37.jpg)
VOCABULARY
Choose 5 economic indicators from the word pic and explain what they mean.
![Page 38: A piece of economic data (statistic) indicates the direction of an economy](https://reader033.vdocument.in/reader033/viewer/2022051214/56649f1c5503460f94c32ff2/html5/thumbnails/38.jpg)