Introduction to Basics of Economics
GDP is the total value of all goods and services produced within a country's borders in a given period of time. It is often used as a measure of economic growth and is an important indicator of a country's economic health. GDP is calculated by adding up the value of all final goods and services produced in a country during a given time period. This includes everything from cars and computers to haircuts and legal services.
Inflation measures the rate at which the general level of prices for goods and services is rising. Inflation is typically measured using the Consumer Price Index (CPI), which tracks the price of a basket of goods and services over time. Economists generally consider a moderate level of inflation to be healthy for an economy, as it encourages spending and investment. However, high levels of inflation can be damaging, as they reduce the purchasing power of consumers and can lead to economic instability.
Unemployment measures the percentage of the labor force that is without work but is actively seeking employment. Unemployment is typically measured using the unemployment rate, which is calculated by dividing the number of unemployed individuals by the total labor force. High levels of unemployment can be damaging to an economy, as they reduce consumer spending and can lead to social and political unrest.
Example: Let's say that Country A produces $10 million worth of goods and services in a year. If the following year, Country A produces $11 million worth of goods and services, its GDP growth rate would be 10%.
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