1. Learning Objective
Today I will be able to compare the GDPs and CPIs of different countries by calculating the GDP & CPI across the world by searching online.
Agenda:
Lecture: Ch Gross Domestic Product
CPI-GDP Worksheet
Vocabulary Ch. 11 OR Ch. 18
No Exit Slip

2. Title Notes: Ch. 11.1 Gross Domestic Product
Economy
Structure of economic activity in a region, a country, group of countries, or the world.

3. GDP (Gross Domestic Product)
Measures the market values of all FINAL goods & services produced w/ in an economy.
Within a given period!
GDP/Economy by region:
Ex. U.S. economy, European economy, LA economy, OR World Economy

4. Double-counting
ONLY the final sale of the good/service is accounted for.
OR the added value is accounted for
.50 Cents per LB.
.05 Cents per LB.
$5 per Pizza

5. Manufacturer sells it retail store for $120
Ikea sells desk to you for $200
Milling company sells to manufacturer for $50
Sold to milling company for $20
Log/Tree
Wood/Lumber

6. If you add up each value in which the wood/desk was sold to create it into a desk, total $390. BUT, that is double-counting!!!! $20 + $50 + $120 + $200 = $390 The actual value is $200, because that is the FINAL/added value.

7. National Incomes Accounts:
Organizes data collected about economy
Tracks final goods (and services)
By the federal government
Variety of sources

8. Two approaches to calculate GDP:
Expenditure approach Aggregate Expenditure
Income approach Aggregate Income
Aggregate Expenditure= GDP = Aggregate Income
-how is spent should match how much income is made.

9. GDP = Aggregate Expenditure C + I + G + (X – M)= GDP
Government purchases:
Public goods & services
Net Exports (X-M):
C + I + G + (X – M)= GDP
X= Exports total value
Consumption:
M= Imports total value
purchase of final goods/services.
Subtract imports from exports.
Nondurable & durable goods.
Transfer payment (EBT/unemployment), stocks, bonds, & used items not included in GDP.
Investment:
spending on capital goods & inventories. Not used goods.
Ex. New computers (inventory), but not used computers sold.

10. Government spending accounts for 20% of US GDP.
Public Spending—what gov. buys for the public: clearing snowy roads, new books for library, etc.
Expenditure: (EBT, Medicare, etc.) money provided in GDP, NOT what is spent by those who receive gov. aid.

11. GDP: How Does it Work? Read each situation.
Based on the situation, decide if product would be accounted for in GDP.
Explain why or why not.

12. No Exit Slip