Question

What other indicator do you think we should look at to determine if an economy is "strong"? You might get some ideas by looking at the "FRED" database. Or alternatively, of the indicators discussed in the lessons, which do you think is most important? Why?

Answer 1

Answer

1. Real GDP (Gross Domestic Product)

The real GDP is the market value of all goods and services produced in a nation during a specific time period. Real GDP measures a society's wealth by indicating how fast profits may grow and the expected return on capital. It is labeled "real" because each year's data is adjusted to account for changes in year-to-year prices. The real GDP is a comprehensive way to gauge the health and well-being of an economy.

2. M2 (Money Supply)

M2 money supply represents the aggregate total of all money a country has in circulation. It takes into account all physical currency such as bills and coins; demand deposit savings and checking accounts; traveler's checks; assets in retail money market accounts and small money market mutual funds, (i.e., less than $100,000); individual time deposits and savings deposits, such as certificates of deposits; in addition to some repurchase agreements and Eurodollar holdings.

3. Consumer Price Index (CPI)

The CPI measures changes in the prices paid for goods and services by urban consumers for the specified month. The CPI is essentially a measure of individuals' cost of living changes and provides a gauge of the inflation rate related to purchasing those goods and services.

6. Current Employment Statistics (CES)

CES provides comprehensive data on national employment, unemployment and wages and earnings data across all non-agriculture industries, including all civilian government workers. Information is disseminated in many different ways-for example, employment/unemployment rates among men and women, varied ethnic groups and teens.