1. Gross Domestic Product
GDP

3. Gross Domestic Product
GDP = the total market value of all final goods and services produced in a country in a year.
Measurement
The expenditure approach everything bought in the country.
Real GDP = adjusted for inflation

4. Y = C + I + G + X -M National GDP Is composed of
Consumption by households
Investment purchases of business and households
Government Spending
Total Exports minus
Total Imports

5. Not Counted Raw materials Intermediate goods Anything for resale
Car parts, etc
Anything for resale
Purchase of stocks and bonds (transfer of money nothing is bought)
Money put in savings
Leisure activities
reading, listening to music, etc.
Household activities:
cleaning, cooking, mowing lawn, etc.

6. Not included Retirement Days off Vacations Child care Housework
Gardening
DIY

7. Economic Growth Economic growth = Rise in real GDP = economic growth
Decline in real GDP = contraction
Decline for 2 quarters = recession
Decline for longer than 2 quarters = depression

8. Aggregate Supply Aggregate = Total
Aggregate Supply = total supply for everything
Short run = aggregate supply curve (SRAS)
positive slope
Shows direct relationship between price level and real GDP.
Long run =
prices completely flexible
Full employment
supply curve (LRAS) is vertical

9. Aggregate Demand Aggregate Demand = Everything bought in the country
GDP
negative-sloping
shows inverse relationship of price level and real GDP.

10. The national economy goes up and down like a roller coaster over time
The Business Cycle
The national economy goes up and down like a roller coaster over time
Real GDP
Inflationary Gap
Recessionary Gap
Peak
Real GDP
Trough
Full Employment
Recession
(Contraction)
Recovery
(Expansion)
Time
A recession is 6 month period of decline in Real GDP. (If really bad…then depression) 10
Copyright
ACDC Leadership 2018

11. Recession Contraction for 2 consecutive quarters unemployment rises
Begins at peak
Ends at the trough
Depression = severe recession

12. Depression severe recession Has large unemployment, acute shortages
excess capacity in manufacturing.

13. The Cycles Boom = period of prosperity
If there is a contraction
Expansion follows
If there is a Recession
Recovery follows
Boom =
period of prosperity
New cycle expands further than previous peak

14. Expansion production increases resources are being utilized.
GDP increases,
unemployment decreases
inflationary pressure rises.

15. Question #1 In the formula, C + I + G + Nx, what does the C stand for?
Consumption

16. Question #2
What do we call the total market value of all goods and services produced in a year?
GDP

17. Question #3
Real GDP is adjusted for what?
Inflation

18. Question #4 In the formula, C + I + G + Nx, what does the G stand for?
Government Spending

19. Question #5
A period of economic decline (1 Quarter or less) is called?
Contraction

20. Question #6
What is the lowest point of the business cycle?
Trough

21. Question #7 In the formula, C + I + G + Nx, what does the I stand for?
Investment Spending

22. Question #8
A period of economic growth following a contraction is called?
Expansion

23. Question #9
The highest point of the business cycle is called?
Peak

24. Question #10
What do we call a severe recession?
Depression

25. Summarizer What I thought you taught:
Students will brainstorm 4-6 new vocabulary from today’s lesson and write them in a list.
The students will write a paragraph of 5-7 sentences explaining each of the new vocabulary and how they relate to each other.