1. Chapter 2-1

2.   GDP – is the total dollar value of all final goods and service produced in one country in one year.  Measures the national output (how much are we producing) 2013 GDP - $16.7 trillion Gross Domestic Product

3.  1.Consumer Spending – spending for food, clothing housing, and other spending 2.Investment Spending – spending by businesses for buildings, equipment, and inventory (investment in the business) 3.Government Spending – spending by the government to pay employees and to buy supplies and services 4.Net Exports – export of the country minus imports into the country Four components of GDP

4.  C + G + I + NX Components of GDP

5.   GDP does not include work you do for yourself.  Example: If you pay for a lawn mowing service it is included. However, if you mow your own lawn, the value of that is not included.  Only FINAL goods are counted. If intermediate goods (raw materials) were counted as well, the value of the intermediate goods would be counted twice. What is included?

6.   The US had an annual GDP of about $16 trillion.  Just referring to the dollar amount does not tell the whole story.  In order to compare country to country you need to calculate GDP per Capita (or GDP per person)  Take GDP and divide it by the total population Comparing GDP

7.  USASingapore GDP16.7 trillion295 billion Population318 million5.5 million GDP Per Capita$52,800$62,400 Comparing GDP

8.   Workers of a country contribute to the economy in several ways. 1.Their labor activities create needed goods and services. 2.The wages they receive are spent to create demand for various items. 3.Increase in demand results in an increase in employment. Labor Activities

9.   Labor Force consist of all people above age 16 who are actively working or seeking work.  Are you in the labor force???  Unemployment rate is the portion of people in the labor force who are not working.  People are considered to be unemployed if they are looking for work and willing to work but unable to find a job.  The main cause of unemployment is reduced demand. Employment

10.   US Labor Force 155,400,000  Unemployment Rate: 5.9%  Number of individuals who are willing and able to work but can’t find work:  155,400,000 *.059 = 9,168,600 Unemployment Rate

11.   Productivity is the production output in relation to a unit of input, such as workers, machine hours, man hours…  How to improve productivity:  Management techniques  Improved capital resources (better equipment)  Worker training  Incentives  Improved working conditions Productivity

12.   Personal income refers to the salaries and wages as well as investment income and government payments to individuals  Retail sales are the sales of durable and nondurable goods bought by consumers. These are an indicator of general consumer spending patterns in the economy Consumer Spending