Sept 28 I.GDP A.Measurement B.Does GDP Measure Quality of Life? NOTE: Oct 5 Janus Debate 4:00 in Davis Center Friday October 2 in class Multiple choice:

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Sept 28 I.GDP A.Measurement B.Does GDP Measure Quality of Life? NOTE: Oct 5 Janus Debate 4:00 in Davis Center Friday October 2 in class Multiple choice: bring a pencil Covers Ch 1-5, readings on syllabus, class materials, and ed readings No calculators, cell phones, or computers Old exam is online Justin does not have the exam questions or answers Anyone who needs special accommodations should me NOTE: Syllabus says Fall recess is Oct 7—it is Oct 9 Exam 1

Friday October 2 in class Friday October 2 in class Multiple choice Multiple choice Covers Ch 1-5, readings on syllabus, class materials, and ed readings Covers Ch 1-5, readings on syllabus, class materials, and ed readings Old exam is online Old exam is online Justin does not have the exam questions or answers Justin does not have the exam questions or answers NOTE: Syllabus says Fall recess is Oct 7—it is Oct 9 NOTE: Syllabus says Fall recess is Oct 7—it is Oct 9

A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale- retail sales. A recession begins just after the economy reaches a peak of activity and ends as the economy reaches its trough. Between trough and peak, the economy is in an expansion. Expansion is the normal state of the economy; most recessions are brief and they have been rare in recent decades. ---National Bureau of Economic Research

Recent GDP Trends

GDP Growth in your lifetime GDP in 1990 = $5,800 billion GDP in 2008 = $14,441 billion Growth = ( )/5800 = 148%

Adjust for inflation We want 1990 quantities at 2008 prices GDP in 1990 at 2008 prices = Real 1990 output x 2008 price of each good produced = $8,034 billion So real GDP growth is (14,441-8,034)/8,034 = 79.8%

Components of GDP ($billion) GDP $ 14,143.3 Consumption $ 9, % Investment $ 1, % Government Spending on Goods and Services $ 2, % Net Exports (X-IM) $ (338.7)-2%

GDP $ 14,143.3 Consumption $ 9,996.6 Goods $ 3,191.2 Services $ 6,805.3 Investment $ 1,492.2 Nonresidential $ 1,387.3 Residential Housing $ Government Consumption $ 2,926.8 Federal $ 1,137.0 Defense $ Nondefense $ State and Local $ 1,789.8 Net Exports $ (338.7) Exports $ 1,492.2 Imports $ 1,830.8 Gory Details

What GDP Does Not Measure 1. Non-Priced Services 2. Illegal Activity 3. Leisure 4. Bads 5. Poverty and inequality 6. Love, Satisfaction, Happiness

Environmental Quality and GDP

RankNationGDP in BillionsGDP/capita 1United States$14,260$46,900 2China$7,973$6,000 3Japan$4,329$34,000 4India$3,297$2,900 5Germany$2,918$35,400 6Russia$2,266$16,100 7United Kingdom$2,226$36,500 8France$2,128$33,200 9Brazil$1,993$10, Italy $1,823$31,300 12Mexico$1,563$14,200 15Canada$1,300$39, Haiti$12$1, Afghanistan$22$700 GDP Around The World

G20’s GDP as a proportion of world total: 2008

GDP per capita in PPP terms of G20: 2008

Are Natural Resources Key?

GDP and Light

…And Where It’s Not Light

A Tale of Two Koreas North KoreaSouth Korea GDP$40 billion$1,335 billion GDP/capita$1,800$27,600 Electricity Production 22 billion kwh440 billion kwh Telephone land lines1.2 million23.9 million Cellular phones043 million Population23 million48 million Note that in 1955 the two Koreas had approximately equal GDPs per capita and they were both lower than Argentina’s. Today Argentina’s GDP per capita is $14,200.

GDP and Quality of Life: Food Supply

GDP and Quality of Life: Safe Water

Pct of HHS with All U.S. HHs 1971 Poor U.S. HHs 1994 Washing Machine71%72% Dryer44%50% Dishwasher19%20% Refrigerator83%98% Color TV43%93% Telephone93%77% Air Conditioner32%50% One or more cars80%72% Access to Goods in the US: Growth and Poverty Source: U.S. Census Bureau