Economic Performance
SECTION 1: Gross Domestic Product
SECTION 2: Business Cycles
SECTION 3: Economic Growth
1
SECTION 1
Gross Domestic Product
Objectives:
How do economists calculate gross domestic
product?
What are some of the limitations of gross
domestic product?
What other statistics do economists use to
measure the economy?
2
SECTION 1
Gross Domestic Product
3
SECTION 1
Gross Domestic Product
Limitations of gross domestic
product:
initial figures often inaccurate
does not include nonmarket activities or the
underground economy
does not accurately measure a nation’s well-
being
4
SECTION 1
Gross Domestic Product
Other statistics economists use to
measure the economy:
gross national product
net national product
national income
personal income
disposable personal income
5
SECTION 2
Business Cycles
Objectives:
What are the four phases of the business
cycle?
What factors influence the business cycle?
What are the three leading indicators used to
determine the current phase of the business
cycle and predict where the economy is
headed?
6
SECTION 2
Business Cycles
7
SECTION 2
Business Cycles
Factors that influence the business
cycle:
levels of business investment
availability of money and credit
public expectations about the future
changes in the world’s economy or political
climate
8
SECTION 2
Business Cycles
9
SECTION 3
Economic Growth
Objectives:
Why is economic growth important?
What are the requirements of economic
growth?
What is the relationship between economic
growth and productivity?
10
SECTION 3
Economic Growth
11
SECTION 3
Economic Growth
13
CHAPTER 10
Wrap-Up
1. Explain the difference between nominal GDP and
real GDP. Why is real GDP a better measure to use
when examining changes in GDP over time?
2. Explain the difference between personal income
and disposable income.
3. Identify and explain the four phases of the business
cycle.
4. How are economic growth and productivity
related?
5. Why is real GDP per capita used to measure
economic growth?
14