1. Gross Domestic Product

2. What is GDP?
This is the market value of final goods and services produced within a country in a given time period.

3. Why is GDP important? BEWARE: GDP is not entirely reliable!
GDP is a strong indicator of a country’s economic growth. It can tell us whether an economy is “healthy” or not.
BEWARE: GDP is not entirely reliable!

4. 2016 The next 5-8 minutes are going to represent all of 2016.
During this time, you must produce TWO of the following goods:
Shirt
Calculator
Telephone
Doll
Book,
Basket of Apples
*You can produce two different types of goods from the list, or two of the same good.*

5. Time is up! Place your goods on the table at the front of the room.
Together we are going to come up with a reasonable price for each of the items.

6. Round 2 Destroy your old goods
Now, you are going to produce goods for all of 2017.
This time, you can only produce ONE good with the play dough (same prices will apply)

7. Pop Quiz
1. What is GDP? (Don’t just tell me what the letters stand for…give me more)
2. Why do economists bother looking at GDP?

8. Nominal GDP vs. Real GDP
Nominal GDP (aka Current or Money GDP): is the GDP using current market prices (like how we calculated GDP while using the playdough)
This number is used for comparing GDPs of different quarters within the same year.
Real GDP: is the GDP that adjusts the prices to take into account inflation.
This number is used when comparing different years.

9. Think fast!
If I was comparing America’s GDP from January 1-March 31, 2017 & April 1-July 31, 2017, which type of GDP would I look at?

10. So, what’s inflation?
When the average price levels of goods and services rise over time.

12. What do we use to find out if prices are inflating over time?
The Consumer Price Index (CPI) is a measure that examines the average prices of a basket of consumer goods and services, such as transportation, food and medical care. It is calculated by taking price changes for each item in the predetermined basket of goods and averaging them.

13. Goods
# Produced
Price 2016
Price 2017
Revenue
Shirts 10
$12
100
Calculator 8 15
$15.50
120
Telephone 6
$102
600
Doll
$15 90
Book 20
$20
160
Basket of Apples 9 5 $7 45