Measuring Economic Growth

Write and answer the following questions on a separate piece of paper. 1.Define GDP.p320 2.What items are not included in calculating GDP? Explain why. p321 3.What are the limitations of GDP? p323 4.What is a census? Why do we have one? p329 5.There are three factors that influence population trends. List and describe them. p334 6.Why is the rate of population growth declining? P334 7.How will the retirement of baby boomers affect your generation?

GDP – Gross Domestic Product GDP: the dollar value of all final goods, services, and structures produced within a country’s national borders during a one-year period U.S. Economy Health

Items not included in GDP Intermediate products – products that are components of other final products included in GDP – IE: Eggs and flour used to bake bread that is sold Secondhand sales – IE: Goodwill, Plato’s Closet, Bargain Corner in newspaper, Craig’s list, ebay Nonmarket transactions – IE: fixing your own car, mowing your own lawn Underground Economy – unreported legal and illegal activities – IE: Illegal – Gambling, drug trade, smuggling legal – Yard sales, bake sales, flea markets

What’s the Difference between Current GDP and Real GDP? Current GDP is GDP measured in current prices, unadjusted for inflation and Real GDP is GDP after adjusted for inflation

GDP Per Capita GDP divided by the population To get the amount of output per person

Limitations of GDP 1.GDP tells nothing about what is being produced; only the final figure 2.GDP tells little about the impact of production on the quality of life 3.Some GDP is produced to control activities that give little satisfaction

How National Income Can Be Measured Gross National Product = dollar value of all final goods, services, and structures produced in one year no matter if it is in the U.S. or not Net National Product = GNP – depreciation (depreciation represents equipment that wore out or became obsolete) National Income = Net national product less indirect business taxes Personal Income = total amount of income of consumers before individual income taxes Disposable Personal Income = Personal income after individual income taxes

Economic Sectors 1.Consumer Sector: household, families 2.Investment Sector: Proprietorships, Partnerships, Corporations 3.Government Sector: Local, state, and federal levels of government 4.Foreign Sector: Includes all consumers and producers outside the U.S.

POPULATION AND ECONOMIC GROWTH

How Can We Tell How Many People We Have in the U.S.? Census: a required by the Constitution that the government periodically take an official count of all people living in the United States, including their place of residence Question: Why do they do this?

Projected Population Trends MAIN IDEA: Fertility, life expectancy, and net immigration influence population trends. Fertility Rate: the number of births that 1,000 women are expected to undergo in their lifetime. Life Expectancy: the average remaining life span of a person what has reached a given age. Net Immigration: the overall change in population caused by people moving into and out of the country.

QUESTION: DO YOU THINK THE POPULATION IN THE U.S. IS INCREASING OR DECREASING? ANSWER: DECREASING

POVERTY AND THE DISTRIBUTION OF INCOME In this section, you will learn about the factors that contribute to income inequality and the programs that have implemented to reduce poverty.

Defining Poverty People are classified as living in poverty if their income falls below a predetermined level or threshold. Poverty threshold is the annual dollar income used to determine the number of people in poverty Poverty guidelines administrative guidelines used to determine eligibility for certain federal programs

Reasons for Income Inequality EducationWealth Tax Law Changes Decline in Unions More Service Jobs Monopoly Power Discrimination Changing Family Structure

Reasons for Income Inequality Education Wealth Tax Law Changes Decline in Unions More Service Jobs Monopoly Power Discrimination Changing Family Structure

Antipoverty Programs Welfare: economic and social assistance from the government or private agencies because of need Income assistance: Temporary Assistance for Needy Families, Supplemental Security Income General Assistance: programs that assist poor people, but do not provide cash – Food Stamps: gov’t issued coupons that can be redeemed for food – Medicaid: a joint federal-state medical insurance program for low-income people

Antipoverty Programs Social Service Programs: child abuse prevention, foster care, family planning, job training, day care, etc. Tax Credits – Earned Income Tax Credit (EITC) federal tax credits and cash payments for low-income workers Enterprise Zones: an incentive for businesses to locate to areas where business is needed Workfare Programs: welfare participates work for their welfare