Learning Objective Today I will be able to compare the GDPs and CPIs of different countries by calculating the GDP & CPI across the world by searching.

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Presentation transcript:

Learning Objective Today I will be able to compare the GDPs and CPIs of different countries by calculating the GDP & CPI across the world by searching online. Agenda: Lecture: Ch. 11.1 Gross Domestic Product CPI-GDP Worksheet Vocabulary Ch. 11 OR Ch. 18 No Exit Slip

Title Notes: Ch. 11.1 Gross Domestic Product Economy Structure of economic activity in a region, a country, group of countries, or the world. https://www.google.com/publicdata/explore?ds=d5bncppjof8f9_&ctype=l&strail=false&bcs=d&nselm=h&met_y=ny_gdp_mktp_cd&scale_y=lin&ind_y=false&rdim=region&idim=country:USA:CHN&ifdim=region&hl=en&dl=en&ind=false

GDP (Gross Domestic Product) Measures the market values of all FINAL goods & services produced w/ in an economy. Within a given period! GDP/Economy by region: Ex. U.S. economy, European economy, LA economy, OR World Economy http://www.tradingeconomics.com/united-states/gdp

Double-counting ONLY the final sale of the good/service is accounted for. OR the added value is accounted for .50 Cents per LB. .05 Cents per LB. $5 per Pizza

Manufacturer sells it retail store for $120 Ikea sells desk to you for $200 Milling company sells to manufacturer for $50 Sold to milling company for $20 Log/Tree Wood/Lumber

If you add up each value in which the wood/desk was sold to create it into a desk, total $390. BUT, that is double-counting!!!! $20 + $50 + $120 + $200 = $390 The actual value is $200, because that is the FINAL/added value.

National Incomes Accounts: Organizes data collected about economy Tracks final goods (and services) By the federal government Variety of sources

Two approaches to calculate GDP: Expenditure approach Aggregate Expenditure Income approach Aggregate Income Aggregate Expenditure= GDP = Aggregate Income -how is spent should match how much income is made. https://www.google.com/publicdata/explore?ds=d5bncppjof8f9_&met_y=ny_gdp_mktp_cd&idim=country:USA:CHN&hl=en&dl=en

GDP = Aggregate Expenditure C + I + G + (X – M)= GDP Government purchases: Public goods & services Net Exports (X-M): C + I + G + (X – M)= GDP X= Exports total value Consumption: M= Imports total value purchase of final goods/services. Subtract imports from exports. Nondurable & durable goods. Transfer payment (EBT/unemployment), stocks, bonds, & used items not included in GDP. Investment: spending on capital goods & inventories. Not used goods. Ex. New computers (inventory), but not used computers sold.

Government spending accounts for 20% of US GDP. Public Spending—what gov. buys for the public: clearing snowy roads, new books for library, etc. Expenditure: (EBT, Medicare, etc.) money provided in GDP, NOT what is spent by those who receive gov. aid.

GDP: How Does it Work? Read each situation. Based on the situation, decide if product would be accounted for in GDP. Explain why or why not.

No Exit Slip