1. Ms. Park

2.  Linda, Tommy

3.  What do you think is the difference between GDP and GDP per capita?

4.  Any guesses for top 10 countries?

5. 1. United States $16,244,600 million 2. China 8,227,200 million 3. Japan 5,959,782 million 4. Germany 3,428,131 million 5. France 2,612,878 million 6. United Kingdom 2,471,784 million 7. Brazil 2,252,664 million 8. Russian Federation 2,014,775 million 9. Italy 2,014,670 million 10. India 1,841,710 million 11. Canada 1,821,424 million

6. 1. Luxembourg $116,000 2. Qatar 98,000 3. Norway 97,000 4. Switzerland 83,000 5. Australia 66,000 6. UAE 64,000 7. Denmark 60,000 8. Sweden 58,000 9. Canada 51,000 10. Netherlands 50,000 11. United States 49,000 China 6,000

7.  Per capita GDP = GDP / population  Real GDP: GDP expressed in constant dollars from a base year ◦ Per capital real GDP = ???  Nominal GDP: GDP expressed in current dollar value

8.  Depending on how GDP is used, either of two adjustments can be made: 1) Inflation adjustment: done by using __________________. 2) Exchange-rate adjustment: done by expressing all countries’ GDP in one currency, usually in USD.

9. 1. Excluded activities: GDP does not include some types of productive activities. This can understate economic activity and living standards. a)Non-market activities: homework, unpaid childcare b)Underground activities: smuggling, under-the- table money 2. Product Quality: GDP does not capture the quality of improvements in products

10. 3. Composition of output: GDP does not tell us what is produced and purchased 4. Income Distribution: GDP does not reflect how output is distributed among citizens 5. Leisure: With increased leisure, GDP understates economic well-being 6. Environment: GDP does not differentiate between activities that are harmful to the environment and those that are not

11.  Gross National Product (GNP): total income acquired by Canadians both within Canada and elsewhere  GNP= GDP + Net investment income

12.  Traditionally, Canada’s GNP has been less than GDP. Why do you think it is so?

13.  Net Domestic Income (NDI): income earned by households supplying resources in Canada  NDI = GDP – amounts that are not earning from current production (indirect taxes, depreciation, allowances, statistical discrepancy, etc…)

14.  Personal Income (PI): the income actually received by households  PI = GDP + Government transfer payments + Other payments to persons – earnings not paid out to persons – net investment income

15.  Disposable Income (DI) = Household incomes – Personal taxes and other personal transfers to the government

17.  Assignment from last class: Textbook Question #1 & Handout Problem #1  Assignment for today: Textbook Question #2 & 6