1. Copyright ©2003, South-Western College Publishing Contemporary Economics: An Applications Approach By Robert J. Carbaugh 2nd Edition Chapter 10: Gross Domestic Product and Economic Growth

2. Carbaugh, Chap. 10 2 International comparisons of GDP Gross Domestic Product GDP Nation(billions)per person* Some international comparisons of GDP, 1999 GDP = C + I + G + (X - M) Gross Domestic Product = Personal consumption (C) + Gross private domestic investment (I) + Government purchases of goods and services (G) + Net exports (exports - imports) [X-M] United States$8,708.9$30,600 Switzerland260.327,486 Japan4,395.124,041 Canada612.023,725 Mexico475.07,719 Russia375.36,339 Togo1.51,346 Zambia3.3686 Ethiopia6.5599 Sierra Leone0.7414 * measured at purchasing power parity

3. Carbaugh, Chap. 10 3 Components of US GDP, 2000 Gross Domestic Product AmountPercent Component of GDP (billions) of total Disposition of household income$6,757.368% Durable goods820.3 Non-durable goods2,010.0 Services3,927.0 Gross private domestic investment1,832.719% Fixed investment (plant, equipment)1,778.2 Business inventories54.5 Government purchases of goods and services1,743.717% Federal595.1 State and local1,148.6 Net exports of goods and services-370.6-4% Exports1,097.4 Imports1,468.0 Gross Domestic Product9,963.1100

4. Carbaugh, Chap. 10 4 Nominal GDP, real GDP, and deflator Gross Domestic Product Nominal GDPReal GDPGDP deflator Year(billions)(billions)(1996=100) 19905803.26707.986.5 19915986.26676.489.7 19926318.96880.091.8 19936642.37062.694.0 19947054.37347.796.0 19957400.57543.898.1 19967813.27813.2100.0 19978318.48159.5101.9 19988790.28515.7103.2 19999299.28875.8104.8 20009963.19318.5106.9 Nominal and real GDP, 1990-2000

5. Carbaugh, Chap. 10 5 Economic growth Gross Domestic Product Years required to double GDP, beginning in 1960, for selected nations

6. Carbaugh, Chap. 10 6 Productivity trends Economic Growth Labor productivityReal hourly earnings Yeargrowth rategrowth rate 1960s (avg.)3.2%2.9% 1970s (avg.)1.81.3 1980s (avg.)1.20.2 1990-94 (avg.)1.60.8 19950.7-0.4 19962.80.4 19972.10.7 19982.73.9 19993.12.9 Annual rates of growth in US labor productivity and real hourly earnings 1960-1999 Source: Economic Report of the President, 2001; US Dept. of Commerce, Bureau of the Census, Statistical Abstract of the US

7. Carbaugh, Chap. 10 7 Computer technology bolsters US economic growth Economic Growth Technological Gains: each sector's contribution to technological gains Annual contribution to productivity growth (%)

8. Carbaugh, Chap. 10 8 Research & Development Expenditures as a share of GDP, 1998 Economic Growth: Role of Government Source: US Dept. of Commerce, Bureau of the Census, Statistical Abstract of the US, 2000

9. Carbaugh, Chap. 10 9 Impact of education, trade and infrastructure Economic Growth: Role of Government Growth of GDP per Capita (percent per year) Impact of education, openness to trade, and telecommunications infrastructure on economic growth in seventy-four countries, 1965-95 Source: World Bank, World Development Report, 1999