Tonya BlevinsECO2072

Summer 2011

Slide 1: Title Slide 2: Index Slide 3: Introduction Slide 4: Consumption Slide 5: Investments Slide 6: Government purchases Slide 7: Net Exports Slide 8:How GDP relates to economics Slide 9: Conclusion

GDP measures market value of goods/services GDP also measures income/expenditures GDP is broken into four components:◦Consumption◦Investment◦Government Purchases◦Net Exports

Y=C+I+G+NX

Spending by households on goods/services. Can be durable or non-durable Durable includes: appliances and automobiles Non-Durables includes: food and clothing Consumption excludes purchases of new housing Intangible services include: medical care

The purchase of goods for future use. The sum of equipment, inventories, and structures. Includes the purchasing of new housing

Spending on goods/services by federal, local, and state government.

Includes the following:◦Salaries of government workers◦Expenditures on public works

Domestically produced goods by foreigners (exports). Foreign goods by domestic residents (imports)

Y=C+I+G+NX calculates growth of the economy in the United States

From 1965-2010 GDP increased 3% per year. Periods of declination = recession (figure 2, pg 503) Recession = unemployment & bankruptcy Higher GDP = better way of life

GDP measures goods/services produced in the nation. Goods/services measured during given time period. Also measure Total income/Total Expenditures Four Components:

Y=C+I+G+NX Higher GDP = better way of life