The document provides an overview of key economic concepts including microeconomics, macroeconomics, finance, GDP, and the components of GDP. It discusses calculating GDP and provides examples such as calculating GDP for the US in 2003 and Portugal in 2008. It also discusses how changes to different GDP components would affect overall GDP.

1. BellRinger on your white board
1. Who do you think the richest person on your
street is?
2. How do you know?
3. Predict the country that has the world’s largest
economy.
We will take some notes today

2. Interview person next to you
1. What is that person’s name?
2. Where are they from? (birth or hometown)
3. What is a question they have about the
economy, economics or this class? (3 ?s in
case)
4. Where do they want to be 18 years from now?

3. Start with Microeconomics
• Microeconomics – study
of individuals and the
economy
• Macroeconomics – study
of large organizations and
countries and the
economy
• Finance – study of
investment and credit

4. Comparing classes?
• On your white boards, what 3 ways could I
compare the economies of my 5 economics
classes?

5. Gross Domestic Product
• A measure of a country’s economy in a
given time (usually a year or quarter)

6. 2007 Top 10 World Economies

11. Agree: Front of room
US economy is
growing
Disagree: Back of room

13. Agree: Front of room
Mexico’s economy
is bigger than
Canada’s
Disagree: Back of room

15. How do we calculate GDP?

16. Parts of GDP
• Write something new
you bought last week
• All consumer spending
on new items within a
country in a certain year,
month or quarter

17. Parts of GDP
• All investment within a
country in a certain year,
month or quarter
• IOW: business spending
$$ on capital goods
• Interest rates?

18. Parts of GDP
• All government
spending in a
country in a certain
year, month or
quarter
• Examples:
education, military,
roads, healthcare,
etc

20. Parts of GDP
• All net exports from a
country in a certain year,
month or quarter
• Exports = goods
shipped to other
countries
• Imports = goods
brought into a country
from another country
• USA? Mexico?

21. Agree: Front of room
USA imports more
than it exports
Disagree: Back of room

23. Net Exporters
• A country or territory whose value of
exported goods is higher than its value of
imported goods over a given period of time.
• A net exporter is the opposite of a net importer.

24. Net Importers

25. GDP Calculation
Y=C+I+G+E
where
Y = GDP
C = Consumer Spending
I = Investment
E = Exports - Imports
G = Government Spending

26. United States GDP 2003
Y=C+I+E+G
$$ in Billions
Consumer Spending = $7605
Investment = $1606
Exports = $1021
Imports = $1508
Government Spending = $2017
$7605 + 1606 + (1021-1508) + 2017 = $10,741 (2003)

27. GDP
• What economic activity did I leave out?
• 2 ways GDP might be misleading?

28. GDP = C + I + G + (Ex – Im)
Assuming everything else stays equal, what happens if…
US consumers spend 5% more in 2013,
than 2012 for the Winter Holidays.

29. GDP = C + I + G + (Ex – Im)
Assuming everything else stays equal, what happens if…
US government passes $800 billion
healthcare reform bill

30. GDP = C + I + G + (Ex – Im)
Assuming everything else stays equal, what happens if…
US Students learn about the benefits of
saving money

31. GDP = C + I + G + (Ex – Im)
Assuming everything else stays equal, what happens if…
Bank business lending increases by 7% in
2013

32. GDP = C + I + G + (Ex – Im)
Assuming everything else stays equal, what happens if…
Mexican citizens demand 15 % fewer US
made cars

33. GDP = C + I + G + (Ex – Im)
Assuming everything else stays equal, what happens if…
The internet is created

34. GDP = C + I + G + (Ex – Im)
Assuming everything else stays equal, what happens if…
Americans demand 50% more Mexican
baked goods

35. GDP = C + I + G + (Ex – Im)
Assuming everything else stays equal, what happens if…
NBA plays a game in China, afterwards
Chinese people demand more US made
basketballs

36. GDP = C + I + G + (Ex – Im)
Assuming everything else stays equal, what happens if…
US Government cuts
income tax rates by 2 %

37. GDP = C + I + G + (Ex – Im)
Assuming everything else stays equal, what happens if…
World Demand for American timber
increases

38. GDP = C + I + G + (Ex – Im)
Assuming everything else stays equal, what happens if…
US military invades Iran

40. Calculate the GDP for Portugal in
2008. (in millions)
millions
Consumers spent: $90,000
Investment: $40,000
Exported $50,000
Imports $90,000
Portugal: 10 million people
Currency: Euro
Government: $10,000

41. Portugal

42. 1.
GDP Assignment(It’s the part
Which part of the GDP formula is the largest?
you are the most involved in)
2. How many recessions has Argentina had since 1900?
3. When was their worst one?
4. Why are recessions good for selling inferior goods?
5. Calculate US GDP 2010
Consumers: $12 trillion
Investment: $1.5 trillion
Government: $2 trillion
Exports: $1 trillion
Imports: $2 trillion
6. Describe US
Trade (net….?)