GDP Intro

What is GDP Gross Domestic Product – “An aggregate measurement of production of equal to the sum of the gross values added of all resident, institutional units engaging in production (plus any taxes, and minus any subsidies, on products not included in the value of their outputs)” – In plain words: A way of measuring a country’s economic output over a period of time.

GDP What does GDP tell us? – Measures a countries standard of living – If a country produces a lot of goods – If a country imports a lot of goods – How the government spends money – All of these are calculated over a certain period of time

GDP How do we find GDP? – Private consumption + Gross investing + Government spending + Exports – Imports – This includes only spending on new and final goods Ex: A brand new car, brand new shoes, the government spending money on new highway construction, a shipment of American made Boings to Europe.

GDP What is not calculated – Used goods – factors of production – black markets – government transfers of money – Goods produced in other countries Ex: a 1999 Jeep Wrangler, a welder in a factory, Cuban cigars (for multiple reasons)

GDP Can you tell what is GDP and what isn't? – Divide into groups of four – Wait until the image is put up and decide if the image is counted as GDP or not – Discus what your group thinks the answer is and why Write this down on a piece of paper – Hold the answer up after 30 seconds (When I tell you to) – Correct answers will move on, incorrect will be out – We will go until one group survives, or we run out of images *Keep in mind we are calculating U.S. GDP

No! Used goods are not counted as GDP

Yes! New kicks are a finished good sold to consumers!

No! A meat slicer is a factor of production. It is used to make a good!

Yes! Government spending is calculated in GDP

Yes! Eating at a restaurant is a service! Therefore the money spent there is calculated in GDP

No! Although a new car, the Bugatti is made in France, there for not calculated in U.S. GDP

No! Money spent on vacation in foreign countries counts toward their GDP not the U.S.’s!

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