1. Macroeconomic Performance Ch. 12
Economics
Mr. Bennett

2. Measuring the Nation’s Output & Income
Macroeconomics:
The branch of Economics that deals with the economy as a whole
Gross Domestic Product (GDP):
The dollar value of all goods, services, & structures produced within a country’s national borders during a 1 year period.
Most important measurement of the country’s overall economic performance.
USA is # 1 with $17.9 Trillion in 2015

3. Computing GDP
Multiply all the final goods & services produced in a year by their prices.
(6 million cars) x ($25,000) = $150,000,000,000
See Table on page 320
This includes:
Goods -Services -Structures
But excludes:
Intermediate products -Non-market transactions
Secondhand sales -Underground Economy

4. GDP = C + I + G + (X-M)
This is the formula for the Output Expenditure Model
Macroeconomic model describing aggregate demand by the consumer, investment, government, & foreign sectors.
Aggregate demand is the total value of goods & services demanded at all different price levels.
Consumer Sector(C) – Disposable Personal Income (after taxes)
Investment Sector(I) – purchases by businesses
Government Sector (G) - purchases by government
Foreign Sector (X-M) – exports minus imports

5. GDP - abbreviated Current vs. Real GDP:
One misleading thing about GDP is it’s lack of accounting for Inflation (Ch. 13)
Basically, GDP could appear to increase whenever prices/costs/values increase over time (inflation).
So it’s not actually reflecting an increase in production (GDP) but rather an increase in prices (Inflation)

6. GNP – The Measure of National Income
Gross National Product: page 324
The total dollar value of all final goods, services, & structures produced in one year by a country’s residents, REGARDLESS OF WHERE THE PRODUCTION TAKES PLACE.
So while GDP measures the value of all final goods & services produced with the U.S. borders, GNP measures the income of all Americans, whether the goods & services are produced in the U.S. or not.
GNP is the most comprehensive measure of our nation’s income
Net National Product: (NNP)
GNP minus depreciation
Depreciation is also known as capital consumption
It’s how much things lose value over time (like a car loses value when you drive it off a lot)…but we’re talking machinery or other items used in production

7. Ch. 12 Sect. 2: Geography Review
Please open your textbook to page 330
Let’s skim through these terms, I am assuming that you can remember these pretty easily from all your Geography classes
If any are new to you, please add them to your notes!
Terms to review:
Urban v. Rural
Census
Fertility Rate
Life Expectancy

8. Lorenz Curve (pg. 339)
The Lorenz Curve shows how the actual distribution of income varies from an equal distribution of income.
An equal distribution of income is shown as a diagonal line.
The further away from the diagonal line, the more inequality in income distribution.
What’s the big picture:
Rich are getting richer & the poor are getting poorer…
Income inequality

9. Reasons for Income Inequality
Please open your textbook to page 340
Can you think of reasons why there is such income inequality in America?
Let’s discuss
Then add the following terms & definitions to your notes
Key Terms:
Welfare
Food Stamps
Medicaid
Workfare