Spending by business – investmentGovernment expenditures – taxes = deficit. Federal Expenditures: Government expenditures + Transfer payments + interest payments (federaldebt)When did the GDP deflator have its largest value? – 2010s. Greatest increase in GDP deflator: 1980 to 1990Current inflation: 1.7%GDP deflator formula: (Nominal GDP/Real GDP) * 100Which saw deflation since 1970? – The CPI (not real, nominal GDP, GDP deflator)Underemployment rate grew the most during and after the great recessionSince 1970: Payrolls almost doubled: 70 million 140 millionUnemployment rate almost the sameParticipation rate 60% 62%Labor force participation rate rose the most consistently in the years since 1970s.Largest fall inn employment: 2007-2009 recession, 10 million decrease.GDP deflator: 112CPI: 257Percentage change in GDP deflator is the inflation rate.Average annual rate of inflation:Ex: CPI2019: 150 CPI2009: 105(150/105) ^ (1/10) – 1 Creative destruction is common in economies that use markets because profits that a firm might earnfrom an innovative good.