Four Things that Matter

Just as good readings of a person’s blood pressure and cholesterol levels give indications of a generally healthy body over a period of time, we can identify economic indicators that might give us an idea of how healthy an economy is. Four economic indicators are identified: the real GDP per capita gives us a measure of a country’s standard of living; the unemployment rate gives a measure of how well the job market is functioning in providing jobs to its citizens; the rate of inflation gives a measure of how fast the cost of living is rising; and the wage gap gives a measure of how wide is the extent of inequality among workers. In this chapter, we examine why these four indicators matter for the general health of an economy.