Unit 3 MacroeconomicsGross Domestic Product

______________________________ = the study of the _____________ nation

Gross Domestic Product (GDP) – The ___________ dollar value of all final ____________ & ____________ made in a nation in a year- It is always the _______________ of the _____________ & _______________, not the quantity. So, ______ will always be represented as a _____

What is Included in GDP?___________ ______________ = finished products ready for ________________ by ____________________

What is NOT included in GDP?_____________________ goods (_____ final goods) = NOT included in GDP

* Only goods made within our borders NOT companies overseas or outsourced products

How is GDP Calculated?!

GDP = C + I + G + (X-M)* When C, I, G, (X-M) Drops, then GDP Drops* When C, I, G, (X-M) Rises, the GDP Rises

____ - _____________________: Spending by ________________________ on goods and services ex: cars, food, visits to dentists, etc. Makes up 2/3 of GDP spending_____ - _____________________________________: Spending by __________________ on goods and services ex: machines, factories, equipment, tools, construction of new buildings_____ - _______________________: Spending by all levels of ____________________ on goods and services ex: military, schools, highways______ - _________________________: the differences between imports and exports * The only component of GDP that has been consistently negative (meaning we import WAYYY more than we import) * __________________ – Spending by ______________ _________________ the US on ____ _________ Selling US products to other nations ex: Florida Oranges, Dodge Trucks * HINT: eXport - eXit * _________________ – Spending by _______________ on __________________ ______________ ex: Oil, Toyota, Sony * HINT: iMports (M) imports = IN

How is GDP Measured?

By measuring the Economic Growth: the ______________ in __________ over time(Value of GDP from one year to the next)* If the GDP is ____________ for 2 quarters – economy is in a __________________________* If the GDP is _________ for 2 quarters – economy is in ________________ period/expansion

What is needed for growth?

* ______________________ - increased technology = increased supply - better tools, better computers

* ____________________ (remember the Economic resources?) - Factors of Production * Land – natural resources (rice, wheat) * Labor – workers (farmer) * Capital – tools (plow), skills (horticulture knowledge) * Entrepreneur – takes the risk and combines L,L,C

* _________________________ – how fast and how well you get stuff done - increased productivity = increased efficiency = increased supply ex: Specialization, division of labor

Why is measuring economic growth important?

- To keep __________ of our ___________________ of living - To ________________ our resources (and wise use of them) - To be ______________________ with other nations

___________________________________ – the average of how much a person can consume in a period of time - the higher the standard of living, the better

So….what is NOT included in GDP?

1) ________ sales – if you sell something illegally it is tough to add that amount because you probably are not going to report it…

2) ______________ Hand – an item that is being sold for the 2nd + time (not new)

3) Made somewhere else

4) ___________________________ goods – not final products….the goods used to make final goods ex: trees, cotton, steel5) _________________ Transactions – money transfers (like shares of stock, Social Security checks) (The items you purchase will count in GDP, not the money you use to buy them