two things at once because both are really the same thing:for an economy as a w dia m in the text illustrates,these are alternative,equivalent ways of measuring the flow of dollars in the economy. 2.What does the consumer price index measure? 2.The consumer price inde ex measures the overall level of prices in the economy.It tells us the price of a fixed basket of goods relative to the price of the same basket in the base year. Problems and Applications 1.Look at the newspapers for the past few days.What new economic statistics have been released?How do you interpret these statistics? 1.A large number of economic statistics are released regularly.These include the Domestic Product-the market value of all final goods and services produced in a year. The Unemployment Rate-the percentage of the civilian labor force who do not have a job. Corpo rate Profits the ac unting profits remaining after taxes of all of the corporate sector. The Consumer Price Index(CPD- a measure of the average price that consumers pay for the goods they buy;changes in the CPIare a measure of inflation. The Trade Balancethe difference between the value of goods exported abroad and the value of goods imported from abroad. 8.Consider how each of the following events is likely to affect real GDP.Do you think the change in real gDPreflects a similar change in economic well-being? a.A hurricane in Florida forces Disney World to shut down for a month. b.The disco very of a new,easy-to-grow strain of wheat increases farm harvests c.Increased hostility between unions and management sparks a rash of strikes d.Firms throughout the economy experience falling demand,causing them to lay off workers. e.Congress passes new environmental laws that prohibit firms from using ods tha mit I large qua g.Fathers around the country reduce their workweeks to spend more time with their children. two things at once because both are really the same thing:for an economy as a whole,income must equal expenditure.As the circular flow diagram in the text illustrates,these are alternative,equivalent ways of measuring the flow of dollars in the economy. 2.What does the consumer price index measure? 2.The consumer price index measures the overall level of prices in the economy.It tells us the price of a fixed basket of goods relative to the price of the same basket in the base year. Problems and Applications 1. Look at the newspapers for the past few days. What new economic statistics have been released? How do you interpret these statistics? 1.A large number of economic statistics are released regularly. These include the following: Gross Domestic Product—the market value of all final goods and services produced in a year. The Unemployment Rate—the percentage of the civilian labor force who do not have a job. Corporate Profits—the accounting profits remaining after taxes of all manufacturing corporations.It gives an indication of the general financial health of the corporate sector. The Consumer Price Index(CPI)— a measure of the average price that consumers pay for the goods they buy;changes in the CPI are a measure of inflation. The Trade Balance—the difference between the value of goods exported abroad and the value of goods imported from abroad. 8. Consider how each of the following events is likely to affect real GDP.Do you think the change in real GDP reflects a similar change in economic well-being? a.A hurricane in Florida forces Disney World to shut down for a month. b.The discovery of a new,easy-to-grow strain of wheat increases farm harvests. c.Increased hostility between unions and management sparks a rash of strikes. d. Firms throughout the economy experience falling demand,causing them to lay off workers. e. Congress passes new environmental laws that prohibit firms from using production methods that emit large quantities of pollution. f. More high-school students drop out of school to take jobs mowing lawns. g. Fathers around the country reduce their workweeks to spend more time with their children