Chapter Two:

Useful Tools and Concepts

Our Tools for Understanding

Year Unemployment Rate Real GDP Growth Rate2000 4.0% 4.1%2001 4.7% 1.1%2002 5.8% 1.8%2003 6.0% 2.5%2004 5.5% 3.5%2005 5.1% 3.1%2006 4.6% 2.7%2007 4.6% 1.9%2008 5.8% -0.3%2009 9.3% -3.1%2010 9.6% 2.4%2011 8.9% 1.8%2012 8.1% 2.2%

Table 2.1: Unemployment Rate and Real GDP Growth Rate, United States, 2000-2012 (in percent)

Sources: U.S. Bureau of Economic Analysis, http://bea.gov/iTable/index_nipa.cfm ;U.S. Bureau of Labor Statistics, http://bls.gov/cps/cpsaat01.htm.

Figure 2.B1: Unemployment Rate, United States, 2000-2012

Sources: United States Bureau of Labor Statistics, http://bls.gov/cps/cpsaat01.htm; United States Bureau of Economic Analysis, http://bea.gov/iTable/index_nipa.cfm.

2008 (5.8, -0.3)

Figure 2.B2: Relationship between Unemployment and GDP Growth Rate, United States, 2000-2012

Sources: United States Bureau of Labor Statistics,http://bls.gov/cps/cpsaat01.htm; United States Bureau of Economic Analysis, http://bea.gov/iTable/index_nipa.cfm.

Figure 2.B3: Relationship between GDP Growth Rate and Greenhouse Gas Emissions Growth Rate,

United States, 1990-2012

Source: Greenhouse Gas data from United States Environmental Protection Agency, http://www.epa.gov/ climatechange/ghgemissions/usinventoryreport.html.

Different Economic Theories: Examples of Two Basic Models

Factor Markets

Product Markets

Land, Labor, and Capital Services

Produced Goods and Services

Wages, Rents,Interest, and Profits

Payments forProduced Goods

and Services

Households Firms

Figure 2.1: The Circular Flow Diagram for the Basic Neoclassical Model

Figure 2.2: Economics in Context

Figure 2.3: Estimated Size of the Three Spheres of Economic Activity in the United States, 2010

Sources: U.S. Census Bureau, Statistical Abstract of the United States, 2012 (Washington, D.C.: GPO, 2011); Katie Roeger, Amy S. Blackwood, and Sarah L. Pettijohn, The Nonprofit Almanac 2012 (Washington, D.C.: Urban Institute Press, 2012); and authors’ calculations.