1. Entrance Ticket
Explain the tree/forest metaphor for Micro vs Macro

2. Agenda 1) Go Over GDP Comparisons 2) Types of Goods 3) Class Quiz
4) Calculating GDP
5) HW

3. Go Over In-Class Research

4. Economics Graphic Analysis
Use the GDP maps provided and the GDP rankings available from the world bank (google: “world bank gdp ranking”) to answer the assigned questions
Goal: To train you to read graphics/charts and to allow you to see how GDP numbers are useful for making comparisons

5. Types of Goods

6. Final Goods vs Intermediate Goods
Final Goods = Finished goods and services produced for the ultimate (last) user
Intermediate Goods = Goods and services used as inputs for the production of final goods
Note: Only Final Goods are counted in GDP –- Why?
Wood chunks are used to make wooden tables

7. Durable vs Nondurable Goods
Durable Goods = Last longer than 3 years. Exs) Cars, appliances, furniture
Nondurable Goods = Considered “used up” or consumed in less than 3 years. Exs) Food, clothing, gasoline

8. Class Quiz!

9. Final or Intermediate?
GLASS

10. Final or Intermediate?
PHONE CASES

11. Final or Intermediate?
BATH TOWELS

12. Final or Intermediate?
COTTON

13. Final or Intermediate?
COTTON CANDY

14. Durable or Nondurable?
TELEVISION

15. Durable or Nondurable?
WASHING MACHINE

16. Durable or Nondurable?
PIZZA

17. Durable or Nondurable?
IPOD

18. Durable or Nondurable?
POWERADE

19. CALCULATING GDP

20. What is and isn’t included in GDP?
Final goods only, NOT intermediate goods
Secondhand Transactions are not counted (ex. the resale of a used car is not an example of a new production so it is not included)
Nonproductive Financial Transactions are not counted (ex. buying/selling stocks, giving private gifts, any kind of government benefits)

21. The Formula for GDP GDP = C + I + G + (X – M)***
Consumption
Investment
Government Spending
Net Exports
***Each Term Will Be Explained

22. Consumption (C)*** Represents total household spending
Includes money spent on durable goods, nondurable goods, and services
***largest component of GDP

23. Investment (I)
Represents total business spending by businesses for investment in assets (property, machinery, equipment, tools, etc.)

24. Government Spending (G)
Represents total value of goods/services (ex. government workers) purchased by the government as well as the total value of government investments (tanks, schools, highways, bridges, government buildings)

25. Net Exports (X – M)***
X represents the total value of foreign purchases of American products (exports)
M represents the total value of American purchases of foreign products (imports)
So X – M = exports minus imports
***Is most likely variable in GDP equation to be negative --- Why?

26. (HW if not finished in class)
Practice
(HW if not finished in class)

27. HW 1 : Calculate the 2008 GDP

28. HW 2
Label the 5 goods you have as either Finished/Intermediate and Durable/Nondurable
THAT’S IT!