1. DO NOW!
How can we know if our economy is strong or weak?

2. GDP: Gross Domestic Product
How do we measure the strength of our economy?

3. Definition
GDP (Gross Domestic Product): The dollar amount of all final goods and services produced in a country.
=Total produced x market value

4. What things are included? (remember: MADE IN AMERICA!)

5. What’s NOT counted (BAND)
Black market (babysit, illegal)
Abroad (made outside of USA)
Nonproduction transactions
Transfer payments, gifts, stocks
Nonmarket production: fix own car
Double Counting
- intermediate goods→tires on new car, cotton in shirts
- secondhand sales (used)

6. Included or not? A newly built house? A cell phone bought on Ebay?
Tires for a new car?
A Barbie doll made in China?
A Japanese Car made in US?
A lawyer’s services?
Construction I do on my home
Rent on an apartment?

7. Do Now!!! ☺
What different groups or organizations buy goods and services made the United States?

8. How do we measure GDP? * Measure through Spending!
Consumer (C): you and me
Investment (I): businesses
Government (G): school
Net Exports (X-M): exp. – imp.
→ GDP = C + I + G + Xn (X-M)

9. Examples: Consumer: I buy shirts from Gap Investment: UPS buys new van
*Inventory, construction, housing
Government: Army buys missiles
*Note: Welfare/Soc Sec=NOT G.
Net Exports: Japan buys a US made car (Xn up)

10. DO NOW Let’s find out how much you supported US GDP last week!
Write all final goods + services you bought last weekend that would go toward US GDP!
(Don’t include items that don’t go toward US GDP)