What is GDP? What is real GDP? What is a final good or service? What does not directly affect real GDP? Questions to Ponder: Slide 1: Questions

What is GDP? What is real GDP ? GDP is the market value of all final goods and services produced in a country in a calendar year. Real GDP is GDP adjusted for inflation. What is a final good or service? A final good or service is sold to an end user and not an intermediate good which is used in the process of making a final good. An example of a final good would be a sandwich from a restaurant whereas the bread that the restaurant bought would be considered an intermediate good used in the process of producing the sandwich. What does not directly affect Real GDP? Goods and services produced in another country Goods and services that are used as intermediate goods and services Goods and services produced and consumed at home Slide 2: Answers

Scenario 1 Eating out at your favorite local restaurant Slide 3

Scenario 2 Service station attendant changes your flat tire. Slide 4

Scenario 3 Dad helping his child change a flat tire Slide 5

Scenario 4 An Italian vacationing in New York City Slide 6

Scenario 5 An American vacationing in Italy Slide 7

Scenario 6 Buying a bracelet while vacationing in Japan Slide 8

Scenario 7 Buying a chair from a factory in the US Slide 9

Scenario 8 Bread sold at the Family Bakery in Kansas Slide 10

Scenario 9 The bread sold to McDonald’s to use for hamburgers in Kansas Slide 11

Scenario 10 Buying your prom dress Slide 12

Scenario 11 Catering for your prom Slide 13

Scenario 12 Your first brand new car Slide 14

Scenario 13 The tires installed on a car at t he factory Slide 15

Scenario 14 Going to the movie theater Slide 16

Scenario 15 Getting snacks at the movie theater Slide 17

Headlines 1.New Home Construction Falls for 3 rd Quarter 2.Investment Spending Continues to Grow 3.Consumer Spending Increases 4.State Government Cuts Spending on Education 5.Businesses Watch Interest Rates Rise 6.Consumer Confidence Continues to Grow. Slide 18

X-axis Slide Y-axis

X-axis Slide 20 Piecewise Function Y-axis

Slide 21 Piecewise Function X-axis Y-axis (3, 40) (2, 30)

Slide 22 Piecewise Function X-axis Y-axis (5, 15) (7, 5)

Slide 23 Piecewise Function X-axis Y-axis (11, 30) (14, 70)

Slide 24 Piecewise Function X-axis Y-axis (5, 15) (7, 5) (3, 40) (2, 30) (11, 30) (14, 70)

Slide 25 Business Cycle Example Real Gross Domestic Product (In Billions of Dollars) Year , ,200 1,400 1,600 1,800 2,000 (1929, 1050) (1932, 750) (1936, 1000) (1937, 1100) (1938, 1000) (1940, 1500)

Slide 26 Business Cycle from FRED®

Slide 27 Business Cycle Example Real Gross Domestic Product (In Billions of Dollars) Year ,800 13, ,600 14,000 14,400 14,800 15,200 (2004, 13600) (2005, 14400) (2007, 14800) (2013, 15600) 15,600 (2009, 14400)

Slide 28 Business Cycle from FRED®

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