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Six key variables You can get a very good idea of the pulse of economic activity by looking at only six key economic variables six variables that together give a very large chunk of the significant information about the macroeconomy These six variables are Real Gross Domestic Product The unemployment rate The inflation rate The interest rate The level of the stock market The exchange rate Real GDP The first key quantity is the level of real Gross Domestic Product called real GDP for short and often referred to as just GDP Lets unpack the definition of real GDP word-by-word Real GDP divided by the number of workers in the economy is our best readily-available index of the status of the economy how well the economy is doing as a social mechanism for producing goods and services that people find useful the necessities conveniences and luxuries of life US Real GDP per Worker Measured at 1995 prices all economic forecasts are that US real GDP per worker--the total value of all final goods and services produced in the United States divided by the number of workers in the labor force--will kiss 60000 in the year 2000 This marks more than a quadrupling of real material standards of living since 1900 when real GDP per worker at 1995 prices was some 13000 according to standard estimates Other features of macroeconomic history are visible on the graph below--the Great Depression of the 1930s the World War II boom the period of stagnation following the 1973 OPEC oil price increase punctuated by the 1974-75 and the 1980-82 recessions--but there is no doubt that the principal event of the twentieth century was the more-than-quadrupling of real GDP per worker Source Angus Maddison 1995 Monitoring the World Economy Paris OECD as extended The Unemployment Rate The second key quantity is the unemployment rate The unemployed are all
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