When the GDP is falling, the economy is said to be in "trough" phase

After sliding for a while, the economy hits rock bottom and the GDP numbers stabilize for a few months prior to rising. This is a good example of the "expansion" phase of the business cycle.

If the GDP numbers decline for 1 quarter or 3 months, the economy is in a recession.

Real GDP per capita measures economic growth of the whole nation

Capital deepening is the process of increasing the amount of money per worker

Physical capital deepening focuses on improving strong workers.

Human capital deepening focuses on improving the equipment and tools.

Saving and investing is a good idea for individuals, and does play a role in the economy.

Technological progress is not important component in economic growth

The United States government doesn't promote technological growth.

GDP measures the amount of goods and services that are produced by American companies only within the boarders of the United States

One of the great things about the GDP is that it can track nonmarket activities.

One limitation of the GDP is that it cannot track the activity of the "Black Market"

GDP can measure the quality of life

GDP can not account for negative externalities.

When prices rise during inflation purchasing power lowers.

The price index is a measurement that shows the change of wages over time.

The Consumer Price Index uses products from one category and tracks the prices over time. This group of products is known as the "market basket"

The Unites States government agency that CPI and inflation rate is the Bureau of Money Tracking or BMT.

In the "Quantity Theory" of inflation states that inflation is happening because of too much money is being introduced in the economy.

The " demand-pull" theory of inflation states that if demand exceeds supply it will causes an inflation.

The "cost-push" theory indicates that if costs of wages, taxes, or raw materials are going up it is passed on to the consumers.

Savers may gain money if the inflation rate is higher than their banks interest rate.

Full employment is reached when the unemployment rate reaches 4% to 6%/

Inflation is general increase in prices.

Poverty Threshold is when an income level above which income is sufficient to support families or households.

Poverty is the percentage of people who live in households with income below the official poverty line.