Chapter+14

=Chapter 14: Economic Stability=

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Chapter Objectives:

 * Understand differences, components of GNP, GDP
 * Draw out and properly label the business cycle
 * Know elements used to determine expenditure, income approach to calculating GDP
 * Describe shortcomings of GDP
 * Define Consumer Price Index (CPI), and explain why/how it is used in peoples' lives
 * Define: labor force, unemployment, full employment, natural unemployment
 * Differentiate and describe: cyclical, structural, seasonal, frictional unemployment
 * Explain how gov't can use fiscal and monetary policies to maintain stability in the economy

[|Federal Reserve Simulation]: This site is a Flash Animation, and you must make decisions whether to raise or lower interest rates to keep our economy stable!

[|San Francisco Federal Reserve Bank]: Click on "Fed Chairman Game"

__**Fed Chairman Bernanke testifies to Congress about the state of the economy:**__ media type="custom" key="3768849"
 * 1) What economic indicators does he refer to?
 * 2) How does Mr. Bernanke feel about the economy at this time?


 * __Follow-up Analysis to Bernanke's testimony:__**

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=Extra Credit (Answer each question in 3-4 COMPLETE sentences to be considered for full credit):=

1. Why might each of the following be interested in studying trends or changes in the GDP? a. A person in business b. An adviser to the U.S. president c. A member of congress d. A high school student

2. Compare frictional, structural, and cyclical unemployment. Identify one example of each in your local economy.

3. The U.S. armed forces have about 1.5 million people stationed throughout the nation and around the world. a. How would a 50 percent cut in military spending effect your community? b. How would the stability of the U.S. economy be affected if the military budget were cut by 50 percent?