The Main Idea Throughout the years, the U.S. economic system has changed. Each change affected what was produced and how people were employed. To gauge the health of our economic system, we use a variety of economic indicators.

Key Concepts The Changing U.S. Economy Measuring Economic Activity

The Changing U.S. Economy Sometimes major shifts in certain growth areas can change the emphasis of the U.S. economy. The United States has experienced four major economic shifts.

Graphic Organizer 1600s1700s1850s1900sPresent Bartering and trading created our service-based economy Farming created our agriculture- based economy The Industrial Revolution started the industry- based economy The invention of computers created the information- based economy We live in the information age, but still rely upon the other types of economies

Measuring Economic Activity Economic indicators measure things such as: how much a country is producing whether the economy is growing how the economy compares to other countries

Gross Domestic Product gross domestic product (GDP) The total dollar value of all final goods and services produced in a country during one year. Measuring gross domestic product (GDP), involves computing the sum of goods and services sold to businesses, consumers, the government, and other countries.

Components of GDP – what goes into it? 1.Consumer spending for food, clothing, housing and other spending. 2.Business spending for buildings, equipment, and inventory items 3.Government spending to pay employees and to buy supplies and other goods and services

Components of GDP (cont’d) 4. The exports of a country less (MINUS) the imports into the country Ex: Exports – Imports = the money you can count towards your GDP

What counts towards GDP? Ex – You are out mowing your lawn GDP doesn’t include value of work you do for yourself. BUT included in GDP is everything you bought to cut your lawn.

What doesn’t count towards GDP? Only final goods are counted when you measure GDP Ex: Only a finished car is measured in GDP, everything that went into that car wasn’t counted – ex - the steel and fabric Intermediate goods would be counted twice (Steel and fabric)

GDP per capita Another way to measure economic growth is GDP per capita. Calculated by: GDP  ÷ total population. GDP per capita Output per person

Group Activity Get a partner In power point, create a presentation about the countries given to you and include: –Country –Flag –Map of where country is located –Population –GDP –GDP per capita –Works cited page……don’t forget text animation on slides

GDP per capita Reminder: Calculated by- GDP  ÷ total population. USDebtClock

*150+/- million people work in the US Labor force consists of all people over age 16 who are actively working or are seeking work Unemployment rate is the portion of people in the labor force who aren’t working. Employment

People are “unemployed” if: 1.They are looking for work 2.Willing/able to work 3.But can’t find a job Unemployment rate The portion of people in the labor force who are not working

Labor force – I don’t get it Labor Force Unemployed Not part of the Labor force Students, retired people, people who can’t work or don’t want to

Employment The unemployment rate measures the number of people who are able and willing to work but cannot find work during a given period. Unfortunately, not everyone is able/willing to work Students, retired people, and others who cannot or do not wish to work are NOT part of the labor force!!!

Types of Unemployment – don’t need to write these down Frictional – caused by changing jobs; little effect on the economy Seasonal – workers are needed only part of the year

Types of Unemployment (Contd) Structural – new technology replaces workers, requiring new skills or companies merge and eliminate jobs Cyclical – the entire economy slows down Try finding our current unemployment rateunemployment rate

Productivity 1890’s average worker put in about 60 hours of work in a week Now we work around 40 hours a week but we produce WAY more goods and services….how is this? –Technology –Management techniques –Better worker training

Productivity A vital source of economic growth is an increase in output per worker. productivity The production output in relation to a unit of input (how many cans of chicken noodle soup can be produced with the number of staff working at the time)

Productivity An ability to produce more goods and services makes it possible to reduce the number of hours in a workweek. Around the 1900’s = 60 hrs a week Now = 40 hrs a week. How is this so? What are some ways to increase productivity?

Personal Income Personal income funds provide the foundation for buying needed goods and services. Personal income Salaries and wages as well as investment income and gov’t payments to individuals.

Retail Sales On a monthly basis, the U.S. Dept of Commerce measures retail sales by consumers. Increasing retail sales usually points towards economic growth Retail sales Sales of durable and nondurable goods bought by consumers

Retail Sales Main items measure for estimating retail sales include: automobiles, building materials, furniture, gasoline, clothing as well as purchases from restaurants, dept. stores, and food and drug stores

Retail Sales Durable and nondurable? What does that mean? Durable – –a consumer good that will last longer than three years Nondurable – –a consumer good that will last less than three years Examples?

Group Activity On the board, list all the goods and services you used from yesterday morning until you went to bed

GDP When we measure GDP – consumer spending represents the largest category………approx 3/4! (About 70% of the US economy is from consumer spending) From previous class – what are the other categories?

You are a purchasing agent for a large furniture manufacturer. You have received several bids from lumber companies for a supply of teak, a very dense and decay-resistant type of wood. The lowest bid comes from a lumber company that has been known to abuse the environment. Decision Making How does the lumber company’s reputation affect your decision? Explain your answer.

Answer Students might suggest that all aspects of the company’s reputation should be considered before making a decision to buy from the company.

1. What do economic indicators measure? Economic indicators measure the economic health of the nation.

2. How do we find GDP per capita? GDP ÷ by total population of a country

3. What are the main sources of personal income? Wages, salaries, investment income, and gov’t payments.