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Gross Domestic Product. Copyright© 2006 Southwestern/Thomson Learning All rights reserved. ●Gross = Total Domestic = in the country Products = goods and.

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Presentation on theme: "Gross Domestic Product. Copyright© 2006 Southwestern/Thomson Learning All rights reserved. ●Gross = Total Domestic = in the country Products = goods and."— Presentation transcript:

1 Gross Domestic Product

2 Copyright© 2006 Southwestern/Thomson Learning All rights reserved. ●Gross = Total Domestic = in the country Products = goods and services made ●GDP = sum of the money values of all final goods and services produced during a specified period of time within the country ●Gross = Total Domestic = in the country Products = goods and services made ●GDP = sum of the money values of all final goods and services produced during a specified period of time within the country Gross Domestic Product

3 Copyright© 2006 Southwestern/Thomson Learning All rights reserved. Gross Domestic Product ●What Gets Counted in GDP? ♦Only goods and services produced within the year ♦Only final goods and services ♦Only production within the geographic boundaries of the United States ●What Gets Counted in GDP? ♦Only goods and services produced within the year ♦Only final goods and services ♦Only production within the geographic boundaries of the United States

4 Copyright© 2006 Southwestern/Thomson Learning All rights reserved. Which of the following would be included in the GDP? ●A car made by a Korean company in Kentucky? ●A cake made by a local bakery and sold to a caterer who will re-sell the cake to a couple getting married ●A used i-Pod sold on ebay ●A car made by a Korean company in Kentucky? ●A cake made by a local bakery and sold to a caterer who will re-sell the cake to a couple getting married ●A used i-Pod sold on ebay

5 Copyright© 2006 Southwestern/Thomson Learning All rights reserved. Calculating GDP ●Expenditure Approach GDP = C + I + G + (E – I) C = consumer consumption I = business investment G = government spending (E – I) = exports minus imports ●Expenditure Approach GDP = C + I + G + (E – I) C = consumer consumption I = business investment G = government spending (E – I) = exports minus imports

6 Copyright© 2006 Southwestern/Thomson Learning All rights reserved. United States GDP Consumer 8,229 (70%) Business Investment 1,927 (16.5%) Government Spending 2,184 (18.6%) Imports 1,782 Exports 1,175 (-5.1%) Total11,734 (100%) Consumer 8,229 (70%) Business Investment 1,927 (16.5%) Government Spending 2,184 (18.6%) Imports 1,782 Exports 1,175 (-5.1%) Total11,734 (100%)

7 Copyright© 2006 Southwestern/Thomson Learning All rights reserved. Type of GDP ●Real GDP = adjusted to remove inflation ●Per Capita GDP = GDP divided by the population of the country ●Real GDP = adjusted to remove inflation ●Per Capita GDP = GDP divided by the population of the country

8 Copyright© 2006 Southwestern/Thomson Learning All rights reserved. US GDP = $137,500,000,000,000 Population = 301,139,947 European Union GDP = $144,000,000,000,000 Population = 490,426,060 China GDP = $7,040,000,000,000 Population = 1,321,851,888 US GDP = $137,500,000,000,000 Population = 301,139,947 European Union GDP = $144,000,000,000,000 Population = 490,426,060 China GDP = $7,040,000,000,000 Population = 1,321,851,888

9 Copyright© 2006 Southwestern/Thomson Learning All rights reserved. World GDP

10 Copyright© 2006 Southwestern/Thomson Learning All rights reserved. The World at Night

11 Copyright© 2006 Southwestern/Thomson Learning All rights reserved. World GDP per capita

12 Copyright© 2006 Southwestern/Thomson Learning All rights reserved.

13 Global Warming and GDP http://environment.yale.edu/topics/page- 2/3879/interactive_map_climate_change_an d_gdp/ http://environment.yale.edu/topics/page- 2/3879/interactive_map_climate_change_an d_gdp/

14 Copyright© 2006 Southwestern/Thomson Learning All rights reserved. Graphing

15 Copyright© 2006 Southwestern/Thomson Learning All rights reserved. Graphing Price Level AS AD E P1P1 Q1Q1 Real GDP

16 Copyright© 2006 Southwestern/Thomson Learning All rights reserved. ●Economic Growth ♦Economic growth =  GDP ♦  AD and/or  AS  growth ●Economic Growth ♦Economic growth =  GDP ♦  AD and/or  AS  growth Supply and Demand in Macroeconomics

17 Copyright© 2006 Southwestern/Thomson Learning All rights reserved. ●Economic Downturn (Recession) ♦Economic growth = GDP ♦ AD and/or AS  growth ●Economic Downturn (Recession) ♦Economic growth = GDP ♦ AD and/or AS  growth Supply and Demand in Macroeconomics

18 Increase in demand = Increase in GDP Increase in output Price Level Real GDP S1S1 D 0 E D 1 A

19 Decrease in Demand = Decrease in GDP B Price Level S 1 D0D0 E Real GDP D2D2

20 Copyright© 2006 Southwestern/Thomson Learning All rights reserved. Bibliography ●Graphics: Southwester / Thomson Learning http://www.cengage.co.uk/ ●Graphics: Southwester / Thomson Learning http://www.cengage.co.uk/

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