Key Economic Indicators and Calculation Formulas

1. Economic Growth Rate

The economic growth rate is the percentage increase in the Real GDP:

[(New Real GDP - Old Real GDP) / (Old Real GDP)] x 100

Example: If the Real GDP grows from 80 to 100, then the:

Economic Growth Rate = [(100 - 80) / 80] x 100 = (20 / 80) x 100 = 0.25 x 100 = 25%

2. Unemployment Rate

The components are defined as:

• Labor Force = Employed + Unemployed
• Unemployment Rate = [Unemployment / Labor Force] x 100

Example: If Employment = 95 and Unemployment = 5, then:

Labor Force = 95 + 5 = 100

Unemployment Rate = [5 / 100] x 100 = 5%

3. Industrial Capacity Utilization Rate

This rate measures:

[(Actual Production Level) / (Maximum Possible Production Level)] x 100

Example: If a factory can produce at most 1,000 units a month and it is actually producing 650 units a month, then its:

Capacity Utilization Rate = [(650) / (1,000)] x 100 = 65%

4. Personal Savings Rate

The Personal Savings Rate is the percentage of Disposable Personal Income that is Saved:

[(Saving) / (Disposable Personal Income)] x 100

Example: If Disposable Personal Income is 1,000 and Saving is 75, then the:

Personal Savings Rate = [(75) / (1,000)] x 100 = 7.5%

5. Productivity Calculation

Productivity is the $ value of output per hour of work:

[$ value of output] / [number of hours of work needed to produce the output]

Example: If the workers in a factory work for 50 hours, and the resulting output is sold for $50,000, then the:

Productivity = [$50,000] / 50 = $1,000

6. Consumer Price Index (CPI) and Inflation

The CPI for a month is calculated as:

[Cost of the market basket that month] / [Cost of the market basket in the base month] x 100

The Inflation Rate is the percentage increase in the Consumer Price Index (CPI):

[(New CPI - Old CPI) / (Old CPI)] x 100

Example: The base month is January 1985. The market basket is one beer and two pizzas. Prices are:

The CPI for January 1995 = [$4.50 / $2.25] x 100 = 200

The CPI for January 2005 = [$9.00 / $2.25] x 100 = 400

The Inflation Rate from January 1995 to January 2005 is:

[(400 – 200) / 200] x 100 = 100%