I have learned many new things during my studies of economics. Many of the things I have learned throughout my studies have vastly changed my outlook on the health of our economy. For instance, even the definition of a simple term used by economists can greatly misrepresent the economy to one who has never studied economics.
My intent is to demonstrate the differences between the public definitions of economic terms and the definitions understood by economists. My sample audience of the public is extremely small. However, I feel that it is representative of the working class American public.
I will attempt to tie these differences together by analyzing the state of the economy ...view middle of the document...
The “textbook” definition of Gross Domestic Product is much more descriptive and elaborate.
The Gross Domestic Product is one of the measures of national income and output for a given country’s economy. GDP is defined as the total market value of all final goods and services produced within the country in a given period of time (usually a calendar year). It is also considered the sum of value added at every stage of production (the intermediate stages) of all final goods and services produced within a country in a given period of time, and it is given a money value.
The most common approach to measuring and understanding GDP is the expenditure method:
GDP = consumption + gross investment + government spending + (exports –imports), or,
GDP = C + I + G + (X – M). (Gross Domestic Product, unknown date)
The “textbook” definition is vastly different from that of my colleague. It is my opinion that differences between actual definitions and public opinion lead to a misunderstanding of economic topics covered in the American media. These differences often mislead the public.
Another key economic term that is often used is unemployment. I believe this term is often misused or misunderstood by a majority of the American public. I asked a colleague to define unemployment and tell me who is included in the official unemployment rate. The response I received was closer to the actual definition than I expected. My colleague said, “Unemployment is when a person doesn’t have a job. These people are adults who previously held a job.” In general terms, his definition was very close to the “textbook” definition of unemployment and unemployed persons.
The definition of the unemployment rate and unemployed persons I have learned during this course differs from what my pre-economics definition was.
The unemployment rate is the percentage of the civilian labor force that is unemployed. It is equal to the number of unemployed persons divided by the civilian labor force.
Civilian Labor Force = Employed persons + Unemployed persons
According to the Bureau of Labor Statistics (BLS), employed persons consist of:
• All persons who did any work for pay or profit during the survey reference week.
• All persons who did at least 15 hours of unpaid work in a family-operated enterprise.
• All persons who were temporarily absent from their regular jobs because of illness, vacation, bad weather, industrial dispute, or various personal reasons.
According to the (BLS), unemployed persons consist of:
• All persons who did not have jobs, made specific active efforts to find a job during the prior four weeks, and were available for work.
• All persons who were not working and were waiting to be called back to a job from which they had been temporarily laid off. (Arnold, 2008)
Prior to taking an economics class I believed the unemployment rate included all adult persons...