Economic Growth, Its Measurements, Causes, and Effects

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Economic Growth, Its Measurements, Causes, and Effects by Mind Map: Economic Growth, Its Measurements, Causes, and Effects

1. Inflation

1.1. Inflation is the rising price of goods and services over time.

1.2. You have to pay more for services.

2. Profit

2.1. The revenue remaining after all costs are paid.

2.2. Companies use profit to calculate their tax obligation and the dividend they can pay to shareholders.When expenses are higher than revenue, that's called a loss.

3. Financial capital

3.1. is the money, credit, and other forms of funding that build wealth. Individuals use it to invest.

4. Economic indicators

4.1. are statistics that precede economic events. They predict the next phase of the business cycle.

5. Gross Domestic Product

5.1. GDP is the total value of everything produced by all the people and companies in the country. It doesn't matter if they are citizens or foreign-owned companies.

6. Exports

6.1. The goods and services produced in one country and purchased by residents of another country. It doesn't matter what the good or service is. It doesn't matter how it is sent. It can be shipped, sent by email, or carried in personal luggage on a plane.

7. Imports

7.1. Foreign goods and services bought by residents of a country. Residents include citizens, businesses, and the government.

8. Real gross domestic product

8.1. Measurement of economic output that accounts for the effects of inflation or deflation. It provides a more realistic assessment of growth than nominal GDP. Without GDP, it could seem like a country is producing more when it's only that prices have gone up.

9. Inflation effects

9.1. Inflation hurts your buying power. It means you have to pay more for the same goods and services. Inflation can help you if you are a lucky recipient of income inflation.

10. GDP growth rate

10.1. Measures how fast the economy is growing. It does this by comparing one quarter of the country's gross domestic product to the previous quarter. GDP measures the economic output of a nation.

11. Gross national income

11.1. Measurement of a country's income. It includes all the income earned by a country's residents and businesses, including any income earned abroad.

12. Emerging markets

12.1. Nations that are investing in more productive capacity. They are moving away from their traditional economies that have relied on agriculture and the export of raw materials. Leaders of developing countries want to create a better quality of life for their people. They are rapidly industrializing and adopting a free market or mixed economy.

13. Standard of Living

13.1. Measure of the material aspects of an economy. It counts the amount of goods and services produced and available for purchase by a person, family, group, or nation.

14. Debt

14.1. The sum of all outstanding debt owed by the federal government.

15. Business cycle

15.1. The natural rise and fall of economic growth that occurs over time. The cycle is a useful tool for analyzing the economy. It can also help you make better financial decisions.

16. Economic Boom

16.1. The expansion and peak phase of the business cycle. It's also known as an upswing, upturn, and a growth period. Economic activity rises in the areas of gross domestic product, productivity and income. Business sales increase, driving up profits. It's usually accompanied by a bull market in stocks, and a bear market in bonds.

17. Asset Bubble

17.1. When the price of an asset, such as housing, stocks or ​gold, become over-inflated. Prices rise quickly over a short period. They are not supported by an underlying demand for the product itself.

18. Economic Contraction

18.1. Decline in national output as measured by gross domestic product. That includes drop in real personal income, industrial production and retail sales. It increases unemployment rates.

19. The Great Depression

19.1. The Great Depression was a worldwide economic depression that lasted 10 years. Its kickoff was “Black Thursday," October 24, 1929. That's when traders sold 12.9 million shares of stock in one day, triple the usual amount. Over the next four days, stock prices fell 23 percent in the stock market crash of 1929. The Great Depression had already started in August when the economy contracted.

20. Factors of Production

20.1. Land, labor, capital, and entrepreneurship. They are the inputs needed for supply. They produce all the goods and services in an economy. That's measured by gross domestic product.

21. Natural Resources

21.1. Natural resources are materials from the earth that people use to meet their needs. There are two major types of natural resources.

21.2. The first, renewable resources,

21.3. The second, non-renewable resources

22. Labor

22.1. The amount of physical, mental and social effort used to produce goods and services in an economy.

23. Comparative Advantage

23.1. When a country produces a good or service for a lower opportunity cost than other countries. Opportunity cost measures a trade-off.

24. Components of GDP Explained

24.1. The four components of gross domestic product are personal consumption, business investment, government spending, and net exports. That tells you what a country is good at producing. GDP is the country's total economic output for each year.

25. Productivity

25.1. The ratio of output to input. The output is goods and services. The input is labor and capital goods. These are two of the four factors of production.

26. Banking

26.1. Industry that handles cash, credit, and other financial transactions. Banks provide a safe place to store extra cash and credit.

27. Expansionary fiscal policy

27.1. When the government expands the money supply in the economy. It uses budgetary tools to either increase spending or cut taxes.

28. Debt-to-GDP Ratio

28.1. Compares a country's sovereign debt to its total economic output for the year. Its output is measured by gross domestic product.

29. Fiscal Policy

29.1. How Congress and other elected officials influence the economy using spending and taxation. It is used in conjunction with the monetary policy implemented by central banks

30. Central Banks

30.1. Independent national authority that conducts monetary policy, regulates banks, and provides financial services including economic research.

31. Monetary Policy

31.1. How central banks manage liquidity to create economic growth. Liquidity is how much there is in the money supply. That includes credit, cash, checks, and money market mutual funds.

32. Money Supply

32.1. Physical cash in circulation plus the money held in checking and savings accounts.

33. Credit card debt

33.1. Portion of consumer debt that you are supposed to pay off every month. For this reason, it is also known as revolving debt.

34. Consumer Spending

34.1. What households buy to fulfill everyday needs. This private consumption includes both goods and services. Every one of us is a consumer. The things we buy every day create the demand that keeps companies profitable and hiring new workers.