1. GDP, The Business Cycle and Growth
Ch. 12
GDP, The Business Cycle and Growth

2. G.ross D.omestic P.roduct
BEST MEASURE OF PRODUCTIVITY,
GROWTH AND ECONOMIC HEALTH

3. G.ross D.omestic P.roduct
THE VALUE OF ALL FINAL GOODS AND SERVICES PRODUCED WITHIN THE BORDERS OF A NATION IN A CALENDAR YEAR

4. G.ross D.omestic P.roduct

5. G.ross D.omestic P.roduct

6. G.ross D.omestic P.roduct
INCLUDES:
final goods (ex: shoes)
foreign firms within our borders
EXCLUDES:
intermediate goods (ex: shoestrings in shoes)
American firms based in foreign nations

7. G.ross D.omestic P.roduct
CALCULATED BY USING TWO METHODS:
INCOME APPROACH:
all of the income earned by firms
EXPENDITURE APPROACH:
all of the money spent by consumers, government, etc.

8. G.ross D.omestic P.roduct
MUST BE ADJUSTED FOR "INFLATION"
REAL GDP vs. NOMINAL GDP
"nominal:"
uses today's prices
"real:"
takes inflation into consideration

9. G.ross D.omestic P.roduct
MUST BE ADJUSTED FOR "INFLATION"
REAL GDP vs. NOMINAL GDP

10. G.ross D.omestic P.roduct
can be used to
calculate other
meaningful numbers
DPI:disposable personal income
amount of cash
left after taxes
GDP PER CAPITA:
GDP/population
GNP:gross national product
total production of all American owned firms worldwide

11. G.ross D.omestic P.roduct VS. G.ross N.ational P.roduct

12. G.ross D.omestic P.roduct vs. G.ross D.ometic P.roduct per Capita

13. G.ross D.omestic P.roduct vs. G.ross D.ometic P.roduct per Capita

14. G.ross D.omestic P.roduct
DOES NOT INCLUDE:
Black Market activities
Garage Sales, Babysitting, etc.

15. G.ross D.omestic P.roduct
CANNOT ALWAYS INDICATE:
quality of life and "happiness"

16. WHAT FACTORS INFLUENCE G.D.P.?
AGGREGATE DEMAND & AGGREGATE SUPPLY
the sum total of all demand and all supply
REAL GDP

18. How could a nation like "The Congo" achieve growth?
The Steps:
Decide to work toward growth
Deepen your capital
New training for new jobs
New money
save, spend, invest
Repeat

19. Step # 1: Decide to Grow Your Economy

20. Step # 1: Decide to Grow Your Economy

21. Step # : 2 Deepen Your Capital

22. Step # : 3 Deepen Your Capital

23. Step # 4:
Earn New Money

24. Step # 4:
Earn New Money

25. What Can Hurt Growth?
OVERPOPULATION

26. What Can Hurt Growth?
AGING POPULATION

27. What Can Hurt Growth?
UNSTABLE ECONOMY

28. What Can Hurt Growth?
LACK OF FOREIGN INVESTMENT