HomeworkHomeworkRead chapter 11.Define the following terms.
◦GDP◦Real GDP◦Nominal GDP ◦GDP per capita◦GNP◦Intermediate goods ◦What relationship exists between GDP
and standard of living?
Measuring Measuring Economic Economic PerformancePerformanceChapter 11Economics
Gross Domestic Gross Domestic ProductProductGDP: The total market value of
all final goods and services produced annually in a country.
Real GDPReal GDPReal GDP compares current
prices to a base year. This is a more useful economic indicator than nominal GDP.
Final GoodsFinal GoodsFinal goods are sold to the final user.Intermediate goods are sold to
someone, often a producer, who will use it in the manufacture of a final good.
Intermediate goods are not counted in GDP to avoid double counting.
Government statisticians assume that all products that are produced are sold.
Omitted from Omitted from GDPGDP1. Illegal goods and services2. Transactions of legal goods and
services with no record3. Some nonmarket goods and
services4. Sales of used goods5. Stock transactions and other
financial transactions6. Government transfer payments
GDP v. GNPGDP v. GNPGNP measures the total market
value of final goods and services produced by U.S. citizens no matter where they reside.
GDP measures final goods produced within the borders of the U.S. no matter who produces them.
http://www.fte.org/teacher-resources/economic-barometer/?data=2-4
GDP & Standard of GDP & Standard of LivingLivingHigh GDP per capita is usually
associated with a high standard of living.
http://www.fte.org/teacher-resources/economic-barometer/?data=4-4
GDP FormulaGDP FormulaC = consumption (household
spending)I = investment (business
spending)G = government purchases (3
levels of gov.)EX = export spending IM = import spending
GDP = C + I + G + (EX – IM)
Can GDP be used to predict standard of Can GDP be used to predict standard of living?living?*Use CIA World Fact Book *Use CIA World Fact Book
Country GDP GDP per
Capita
Life expectan
cy
Literacy rate
Infant Mortality Rate
Fertility Rate
1 U.S.A. 48,100 78.49 99% 5.98 2.06
2 Somalia
3 Mexico 15100 76.66 86.1% 16.77 2.27
4 Canada
5 Madagascar
6 Great Britain
7 Qatar 102,700 78.09 89% 6.81 1.93
8 Norway 53,300 80.32 100% 3.5 1.77
9 Chad 1,900 48.69 25.7% 93.61 4.93
10
https://www.cia.gov/library/publications/the-world-factbook/
GapminderGapminder
CPICPICPI – Consumer Price Index
◦Used to compute the average price level or inflation
◦Calculated by the U.S. Bureau of Labor Statistics
http://www.fte.org/teacher-resources/economic-barometer/?data=7-12
Inflation CalculatorInflation Calculator
http://www.fte.org/teacher-resources/economic-barometer/?data=8-12
http://www.bls.gov/data/inflation_calculator.htm
UnemploymeUnemploymentnt The U.S. population is divided in
to 2 groups: 1. noninstitutionalized adult civilian
population & the other group consists of people under 16, people in the military.
2. those in a mental or correctional facility.
UnemploymentUnemployment Noninstitutionalized adult
population consists of 2 groups.1. Not in the labor force2. Civilian labor force
Civilian labor force consists of 2 groups:
1. Unemployed persons2. Employed persons
UnemploymentUnemploymentThe unemployment rate is the
percentage of the civilian labor force that is unemployed.
Unemployment rate = unemployed persons/civilian labor force
Current Unemployment Current Unemployment RateRateOctober 7.9% Adult men: 7.3% Adult women: 7.2% Teenagers: 23.7% Whites: 7% Blacks: 14.3% Hispanics: 10% Less than a high school diploma: 12.2% High school graduates: 8.4% Some college or associates degree: 6.9% Bachelor degree: 3.8%
http://www.bls.gov/news.release/empsit.a.htm
Unemployment by StateUnemployment by Statehttp://www.bls.gov/web/laus/laumstrk.htm
Supply & Demand in the Supply & Demand in the EconomyEconomySee example of aggregate supply
& demand curve on p. 305.
Aggregate Demand Aggregate Demand Aggregate demand curve:
Shows the quantity of goods and services that buyers are willing and able to buy at different prices.
Aggregate Supply Aggregate Supply Aggregate supply curve:
Shows the quantity of goods and services that producers are willing and able to supply at different price levels.
Aggregate Supply & Aggregate Aggregate Supply & Aggregate Demand Demand
Term Student Definition
Showing Sentence
Inflation
Deflation
Consumer Price Index
Gross domestic product
Real GDP
Nominal GDP
GDP per capita