Economic Indicators Paper

1521 Words Nov 26th, 2005 7 Pages
Economic Indicators Paper

What does it mean when someone refers to the health of an economy? Furthermore, how can one classify an economy? Americans love to quantify data. Because of this inherent need to compare data, economists have developed a way to collect nearly every type of statistics that may reveal the general health of the economy. These statistics actually tell if the economy is productive and efficient or if it is slow and inefficient. Included in these statistics are Gross Domestic Product (GDP), Consumer Price Index (CPI), Unemployment Rate, Retail Sales, Producer Price Index (PPI), and Personal Income. Included in this paper, Team A defines the preceding six indicators, and describes their status. Additionally, a
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There have been many indicators that have been developed to measure inflation. The CPI measures inflation as experienced by consumers through their everyday expenses. The Producer Price Index (PPI) measures inflation during the early stages of business development, such as production and sales. The best measure of inflation for a given application depends upon how one intends to use this data. CPI allows businesses to adjust prices based upon a comparison of the current cost of a defined set of goods and/or services to the cost of those same goods at a time in the past. It is also, "the best measure to use to translate retail sales and hourly earnings into real or inflation-free dollars" (2005). The CPI is the most widely used measure of inflation and is sometimes viewed as an indicator of the effectiveness of government economic policy. It provides information about price changes in the Nation's economy to government, business, labor, and private citizens and is used by them as a guide to making economic decisions. In addition, the President, Congress, and the Federal Reserve Board use trends in the CPI to aid in formulating fiscal and monetary policies.
Retail Sales Retail sales, represent an important component in the economy. Products sold by companies, such as Target and local retail stores are tracked and reported to the Census Bureau. The Census Bureau compiles this data on a monthly basis
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