Monday October 27 See tutorials on board ECON Lowdown lessons due Wednesday by 10pm Stock Market Project has begun 9 weeks ends today Ch 12 amp 13 Quiz next MONDAY Word Wall Vocab Matrix GDP Presentation amp Notes ID: 768700
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Monday, October 27 See tutorials on boardECON Lowdown lessons due Wednesday by 10pmStock Market Project has begun!9 weeks ends todayCh. 12 & 13 Quiz next MONDAY Word WallVocab MatrixGDP Presentation & NotesWhat counts in GDP? Worksheet- turn in Announcements Agenda
Business Cycle DepressionDurable GoodsFinal GoodsGross Domestic ProductIntermediate GoodsNominal GDPNondurable GoodsReal GDP Recession StagflationConsumer Price Index DeflationFull EmploymentIncome DistributionInflation Inflation Rate Poverty Rate Poverty Threshold Underemployed Unemployment Unemployment Rate
Measuring the Economy Gross Domestic Product
Gross Domestic Product GDP is the dollar value of all final goods & services produced within a country during a given yearDollar value: total of the selling prices of all goods & servicesFinal goods- products in the form sold to consumers, as opposed to intermediate goods, which are used in the production of final goods.U.S. GDP includes all products made in the U.S., regardless of who owns the company.
Calculating GDP
Calculating GDP Consumption (C)- purchases made by householdsInvestment (I)- business purchase of equipment, construction, inventoriesGovernment Expenditure (G)- government purchases & investments (such as libraries) but NOT Social Security or welfare (those are counted when consumers spend them)Exports (X)- goods made in the U.S. & sent to other countries. Imports (M)- goods made elsewhere and brought in to the U.S.
Nominal GDP GDP that is measured in current prices Simply use the current year’s prices to calculate output.An increase in prices makes it appear that GDP has risen, when in reality, output has not.Creates distortion when comparing GDP from year to year.
Real GDP GDP expressed in constant or unchanging prices (base year)When calculating real GDP, a base year prices is used so you can compare output
Limitations of GDP GDP does NOT include:Non-market activities (things people do themselves- caring for children, mowing their own lawn, etc.)Underground economy (black market transactions, “under the table” wages, other legal, informal transactions such as paying someone in cash to babysit every now and then)Negative externalities (unintended economic side effects- if a power plant spends money to reduce damage caused by pollution, those expenses are added to GDP, but the value of a clean environment cannot be calculated) Quality of life (a rising GDP does not necessarily mean people’s standard of living is increasing)
Factors That Affect GDP Aggregate Supply- total amount of all goods and services available at all possible price levelsAggregate Demand- amount of goods & services in the economy that will be purchased at all possible price levels
GDP v. GNP GNP is the annual income earned by U.S. owned firms & U.S. citizens ONLY