ABSTRACT
This chapter explains some of the most important measures of economic health. In terms of a nation's growth rate, it clarifies why real gross domestic product (RGDP) is more important than Nominal GDP (NGDP). GDP can be viewed as the sum of personal consumption expenditures, intended business investment expenditures plus unintended changes in business inventories, government expenditures on final products, and net export expenditures. GDP can also be viewed as the sum of incomes earned from producing final goods and services (G&S). The chapter offers three measures of labor market conditions: the unemployment rate, employment rate, and labor force participation rate, and also explains what they mean, their limitations, and how these measures complement each other. It describes various price indices and their accompanying inflation rates. Besides GDP price index (GDP-PI), three other price indices are frequently cited and used. They are the consumer price index (CPI), personal consumption expenditure price index (PCE-PI), and producer price index (PPI).
