GDP, The Business Cycle and Growth

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Presentation transcript:

GDP, The Business Cycle and Growth Ch. 12 GDP, The Business Cycle and Growth

G.ross D.omestic P.roduct BEST MEASURE OF PRODUCTIVITY, GROWTH AND ECONOMIC HEALTH

G.ross D.omestic P.roduct THE VALUE OF ALL FINAL GOODS AND SERVICES PRODUCED WITHIN THE BORDERS OF A NATION IN A CALENDAR YEAR

G.ross D.omestic P.roduct

G.ross D.omestic P.roduct

G.ross D.omestic P.roduct INCLUDES: final goods (ex: shoes) foreign firms within our borders EXCLUDES: intermediate goods (ex: shoestrings in shoes) American firms based in foreign nations

G.ross D.omestic P.roduct CALCULATED BY USING TWO METHODS: INCOME APPROACH: all of the income earned by firms EXPENDITURE APPROACH: all of the money spent by consumers, government, etc.

G.ross D.omestic P.roduct MUST BE ADJUSTED FOR "INFLATION" REAL GDP vs. NOMINAL GDP "nominal:" uses today's prices "real:" takes inflation into consideration

G.ross D.omestic P.roduct MUST BE ADJUSTED FOR "INFLATION" REAL GDP vs. NOMINAL GDP

G.ross D.omestic P.roduct can be used to calculate other meaningful numbers DPI:disposable personal income amount of cash left after taxes GDP PER CAPITA: GDP/population GNP:gross national product total production of all American owned firms worldwide

G.ross D.omestic P.roduct VS. G.ross N.ational P.roduct

G.ross D.omestic P.roduct vs. G.ross D.ometic P.roduct per Capita

G.ross D.omestic P.roduct vs. G.ross D.ometic P.roduct per Capita

G.ross D.omestic P.roduct DOES NOT INCLUDE: Black Market activities Garage Sales, Babysitting, etc.

G.ross D.omestic P.roduct CANNOT ALWAYS INDICATE: quality of life and "happiness"

WHAT FACTORS INFLUENCE G.D.P.? AGGREGATE DEMAND & AGGREGATE SUPPLY the sum total of all demand and all supply REAL GDP

How could a nation like "The Congo" achieve growth? The Steps: Decide to work toward growth Deepen your capital New training for new jobs New money save, spend, invest Repeat

Step # 1: Decide to Grow Your Economy

Step # 1: Decide to Grow Your Economy

Step # : 2 Deepen Your Capital

Step # : 3 Deepen Your Capital

Step # 4: Earn New Money

Step # 4: Earn New Money

What Can Hurt Growth? OVERPOPULATION

What Can Hurt Growth? AGING POPULATION

What Can Hurt Growth? UNSTABLE ECONOMY

What Can Hurt Growth? LACK OF FOREIGN INVESTMENT

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