1. AP Week 5 Test over Supply and Demand Start Measuring the Economy
Section 3 Modules 10-15
This unit is very formula driven

2. Monday-. YOU HAVE A TEST MODULES 5-9 TOMORROW
Monday- YOU HAVE A TEST MODULES 5-9 TOMORROW. VOCABULARY CARDS FOR BONUS. DUE WHEN YOU COME IN. NO LATE CARDS TAKEN.
Objective: write a one pager with clarity and depth to describe one of the economic concepts studied so far.
Write with proper format, structure of paragraphs and sentences to show flow and support to your thesis.
Do Now: Look back over your notes and decide if you would rather construct a one pager on the basic concepts of scarcity, limited resources and choices, or about trade, specialization and comparative advantage , or with supply and demand. Find information that would support your thesis on the topic you chose.
EQ: How can I develop a thesis statement over an economic topic and then support it with terms and make it understandable to someone that has not studied economics?

3. Turn in the worksheets on Supply and Demand

4. Write a one pager for WAC on one of these or make your own regarding a topic we have covered.
We have studied the basic concepts of economics with a focus on the scarcity of resources and unlimited wants. Describe how the production possibility curve demonstrates these along with opportunity cost.
Discuss foreign trade with specialization and comparative advantage along with voluntary exchange. Explain what comparative advantage is and how it works.
Discuss supply and demand, what does the graph show? What is the difference between change in quantity demanded versus change in demand as well as quantity supplied versus change in supply. What are the shifters and importance of equilibrium. You can discuss ceilings, floors, government regulations impact, or deadweight.
YOU CAN DRAW THE GRAPH AND PROPERLY LABEL OR THE TABLE AND MATH TO SUPPORT YOUR MATERIAL.

5. TUESDAY- we will start the next unit tomorrow
TUESDAY- we will start the next unit tomorrow. Read for this week Module 10-11
Objective: demonstrate what you have learned so far.
TEST- read the questions very careful, look for the cue words. Mark your scan tran carefully.
Do Now: Get your name and period on the answer document. Clear your desk with everything but a pencil.
EQ: Did you read the text? Did you answer the questions for each module? Did you study the vocabulary? In other words, how prepared are you for this?

6. Wednesday:
Objective: Be able to create and explain the flow of resources, money and goods/services. Show how the government, foreign nations, and banking are part of this flow.
Be able to share with your shoulder partner your understanding of the CFM.
Do Now: Consider what the relationship is between households and firms.
EQ: What are the 2 markets? Who buys and sells in each market? What is the national account and how is it used?

7. The Circular Flow Model shows the principles behind the national accounts
The Product Market-
The “place” where goods and services produced by businesses are sold to households.
The Resource (Factor) Market-
The “place” where resources (land, labor, capital, and entrepreneur) are sold to businesses.

8. DEMAND SUPPLY Individuals Businesses SUPPLY DEMAND Resource Market
$$$ Costs $$$
$$$ Income $$$
Resources
Resources
(Factors of
Production)
Individuals
Businesses
Goods and
Services
Goods and
Services
$$$ Spending $$$
$$$ Revenue $$$
SUPPLY
DEMAND
Product Market 8

9. National Accounts
A set of accounts maintained by virtually all countries that tracks the income received and the value of goods and services, or simply put the flow of money between households, firms, government, foreigners and banks. In the simplest illustrations it is simply between the households and the firms.

10. Hand out the expanded CFM to put into your notebook
ACDC intro CFM 4 min.
Hand out activity sheets and complete.
In the expanded version we add the role played in both markets by the government, foreigners and the financial institutions.
THE CRITICAL THING HERE IS THAT ALL THE MONEY EARNED IS SPENT AND FOR THIS MODEL TO WORK IT IS CONSIDERED TO BE EQUAL. IF WE DO NOT SPEND IT ON GOODS AND SERVICES THEN WE PUT IT IN THE BANK AND THEY LOAN IT OUT TO OTHERS TO USE TO BUY GOODS AND SERVICES.
We measure the economy by the earnings shown here or by the value of the goods and services produced.

11. Thursday: This Unit begins the focus strictly on Macro
Be able to define Gross Domestic Product, along with what it is comprised of, and what is not included in the GDP. Be able to list 3 ways that it is figured.
Be able to verbalize the different components and be able to read choices in order to match what is and what is not included in GDP.
Do Now: with your shoulder partner make a list of all the groups that can buy goods and services in the world. See if you can put them into 4 categories.

12. What is Macroeconomics? Why study the whole economy?
Macroeconomics is the study of the large economy as a whole. It is the study of the big picture.
Instead of analyzing one consumer, we analyze everyone.
Instead of one business we study all businesses.
Why study the whole economy?
The field of macroeconomics was born during the Great Depression.
Government didn’t understand how to fix a depressed economy with 25% unemployment.
Macro was created to:
Measure the health of the whole economy.
Guide government policies to fix problems.

13. For all countries there are three major economic goals:
RECALL
Promote Economic Growth
Limit Unemployment
Keep Prices Stable (Limit Inflation)
In this unit we will analyze how each of these are measured.

14. Promote Economic Growth How does a country measure
Goal #1
Promote Economic Growth
How does a country measure
economic growth?

15. How do we know how well the economy is doing?
Economists collect statistics on production, income, investment, and savings.
This is called national income accounting.
The most important measure of growth is GDP.
Gross Domestic Product (GDP) is the dollar value of all final goods and services produced within a country’s borders in one year.
Dollar value- GDP is measured in dollars.
Final Goods-GDP does not include the value of intermediate goods. Intermediate goods are goods used in the production of final goods and services.
One Year-GDP measures annual economic performance.

16. What does GDP tell us? How do you use GDP?
Just like calculating your own income, GDP measures how well the U.S. is doing financially.
How do you use GDP?
Compare to previous years (Is there growth?)
Compare policy changes (Did a new policy work?)
Compare to other countries (Are we better off?)
*CIA Factbook 2010 Estimate

17. World GDP Distribution
2010 Nominal GDP 17

18. 18

19. Calculating GDP Three Ways of calculating GDP:
1. Expenditures Approach-Add up all the spending on final goods and services produced in a given year. THE ONE USED ON TEST
2. Value added- the value of sales minus the value of the inputs.
3. Income Approach-Add up all the income that resulted from selling all final goods and services produced in a given year.
Both ways generate the same amount since every dollar spent is a dollar of income.

20. IT MUST BE PRODUCED IN THE BORDERS OF THAT COUNTRY TO BE PART OF THE GDP IF IT IS PRODUCED IN ANOTHER COUNTRY BY A BUSINESS FROM THE COUNTRY BEING COUNTED THEN IT IS PART OF THE GROSS NATIONAL PRODUCT FOR THAT COUNTRY AND PART OF THE GDP FOR THE FOREIGN COUNTRY

21. Expenditures Approach
You must know this
Four components of GDP:
Consumer Spending
Ex: $5 Little Caesar's Pizza
Investments -When businesses put money back into their own business.
Ex: Machinery or tools
Government Spending
Ex: Bombs or tanks, NOT social security or other transfer payments
Net Exports -Exports (X) – Imports (M)
Ex: Value of 3 Ford Focuses minus 2 Hondas
GDP = C + I + G + Xn

22. What is NOT included in GDP?
Intermediate Goods
No Multiple Counting, Only Final Goods
EX: Price of finished car, not the radio, tire, etc.
2. Nonproduction Transactions
Financial Transactions (nothing produced)
Ex: Stocks, bonds, Real estate
Used Goods- anything not produced that year
Ex: Old cars, used clothes
3. Non-Market (Illegal) Activities
Ex: Illegal drugs, unpaid work, payment under the table
Government transfer payments- nothing produced that year
Ex:welfare payments, unemployment, social security payments

23. Included or not Included in GDP?
For each situation, identify if it is included in GDP FOR THE USA. Then identify the category C, I, G, or Xn
$10.00 for movie tickets
$5M Increase in defense expenditures
$45 for used economics textbook
Ford makes new $2M factory
$20K Toyota made in Mexico
$10K Profit from selling stocks
$15K car made in US, sold in Canada
$10K Tuition to attend college
$120 Social Security payment to Bob
Farmer purchases new $100K tractor

24. Included or not Included in GDP?
$10.00 for movie tickets
$5M Increase in defense expenditures
X $45 for used economics textbook
Ford makes new $2M factory
X $20K Toyota made in Mexico
X $10K Profit from selling stocks
$15K car made in US, sold in Canada
$10K Tuition to attend college
X $120 Social Security payment to Bob
Farmer purchases new $100K tractor

25. FRIDAY
Be able to discuss why GDP is not a complete picture of a countries standard of living
Listen to Robert Kennedy and discuss what you think.
Do Now: List and share with your neighbor things you think make the USA a great country, or why you don’t.
EQ: What are important aspects not measured in GDP and what about the negative things measured?

26. 2007 FRQ

27. What are some problems with using GDP to measure the nation’s standard of living?27

28. Robert Kennedy GDP Speech
Video:
Robert Kennedy GDP Speech 28

29. What were things that he pointed out that the GDP does not measure?
What is measured that makes the numbers go up but would not really be considered a positive image for standard of living?
What would you measure for the standard of living?

30. Why do some countries have higher GDPs than others?
Productivity
1. Economic System
Example#1: Capitalist countries have historically had more economic growth.
Capital (like robots) can produce more than people
Countries with more capital, can produce more products than countries without a lot of capital.
2. Property Rights
3. Capital
Ex: Capital stock is machinery, tools, and man-made resources.
Example#1: India has over a billion people (human resources) but relatively few capital resources and therefore a lower GDP than the U.S.
Example#2: Japan has few natural resources but a high GDP
4. Human Capital (Knowledge)
5. Natural Resources
Ex: Syria has a lower GDP because it is mostly desert.

31. Complete the handout for practice on what is counted and where it goes.