Transcript Business Cycle and GDP

American Government and Economics
Mr. Miller
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It is the “whole” economy
A view of our economy when you consider all
economic indicators of growth…..
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Some indicators we will be learning about include:
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Business Cycles
GDP
Unemployment
Inflation
Poverty
Investment
Government
Consumers
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The Economy moves from periods of growth
to periods of contraction.
This is known as the Business Cycle
The Business Cycle is just like a
rollercoaster
◦ Highs, lows, ups, downs, etc…
Expansion – period of economic growth
- People have jobs, consumers are spending
money
2.
Peak – the height of an economy’s growth.
Growth has stopped.
3.
Contraction – also known as a Recession
- Following a Peak, a period of economic
decline
- People are losing jobs, consumers stop
spending money
4. Trough – the lowest point of an economic
contraction, high unemployment
1.
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Depression - When a recession lasts
longer than 18 months.
◦ Unemployment rate greater than 12%
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Poncho and the business cycle...
The total value of ALL FINAL goods
and services produced within a
country’s borders in one year….
 In 2009, the GDP of the U.S.A. was….
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14.14 Trillion
14,140,000,000,000
1. Final Goods – goods that are
produced and sold and eventually
consumed in some capacity.
Example – Chips Ahoy cookies
2. Intermediate Goods – goods used to
make other goods.
Example – sugar used to make Chips
Ahoy cookies.
GDP indicates the strength of a
country’s economy and standard of
living….
 Higher GDP means citizens are “doing”
well….have jobs, money, in good
health, etc….
 Standard of Living – quality of life.
How “good” it is to live in a particular
country….look at posters on my wall!
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1. GDP per capita – GDP “per person”
◦ this is a measure of one person’s standard of living
◦ Calculated by dividing GDP by the population of a
country
Example – U.S.A. GDP = 14 trillion
 Population of U.S.A. = 300 million
 14 trillion / 300 million = $46,666
 So, the “average” person in the United States produces
approximately $46,666 worth of goods/services each year.
Black Market- buying/selling of
goods/services illegally – not
paying taxes to the government for
the purchase of the good/service
- ex. – bootleg movies
Non-Market Activities
- goods/services that people
make/do for themselves
- ex. Mowing your lawn
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Rank Country GDP (2009)
United States14,2 trillion
People's Republic of China
8.8 Trillion
Japan4.1 Trillion
India3.5 Trillion
Germany2.8 trillion
UnitedKingdom2.13
trillion
Russia2.12 Trillion
France2.11 trillion
Brazil2.0 Trillion
Italy1.76 Trillion
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Same Countries- GDP Per
capita
United States - $46,400
China - $6,600
Japan – $32,600
India - $3,100
Germany - $34,100
United Kingdom- $35,200
Russia - $15,100
France - $32,800
Brazil – $10,200
Italy - $30,300
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GDP
United States of
America (14.2 Trillion)
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GDP per capita
Liechtenstein-$122,000
Population – 35,002
Population of Delaware
– approximately
900,000
0.9 times the size of
Washington, D.C.
1. Mr. Miller paying a student to mow the lawn at his house
2. Mr. Miller paying a lawn-care business to mow the lawn
at his house
3. Mr. Miller cooking a spaghetti dinner for his wife.
4. Mr. Miller taking his wife out to Olive Garden for a fancy
Italian dinner
5. Mr. Miller paying a student to baby-sit his five kids while
he takes his girlfriends to the movies
6. Buying clothes from Ebay.
7. Buying bootleg movies from “Charlie” ‘round the way.
8. Selling home-grown vegetables to your neighbor
9.
Buying organically grown vegetables from the grocery
store
10. Buying clothes from Target.com
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Window glass in new automobiles
Dresses
Bread
Lumber in a new house
Screws used in a cruise missile
New factory
Flour for making bread
Cloth for making dresses
Manicures
Cruise missile
Increase in automobile inventory
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Business Cycle Article/Questions
List 3 Original examples of Final goods
List 3 Original examples of Intermediate
goods
Describe 2 original situations where the
good/service described WOULD be counted
in this year’s GDP.
Describe 2 original situations where the
good/service described WOULD NOT be
counted in this year’s GDP.