1. Bellringer Quiz
7 minutes ½ sheet
1. Which of the three types of income taxes do
wealthy people favor?
2. Which of the three types of income taxes do
poorer people favor?
3. Which part of society is burdened most by the
sales tax?
4. What does liquidity in finance measure?
5. How is a traditional IRA different than a Roth IRA?

2. Traditional IRA
• Individual Retirement
Account
• You have to set it up
• You can deposit up to
$5000 per year
• (into mutual funds,
stocks or bonds)
• Tax loopholes (breaks)
• Can’t touch until 60
• Not liquid
At 10% interest, a $5000 IRA becomes
$226,000 over 40 years!
$10,000 is over $400,000!

3. Roth IRA
• Individual Retirement
Account
• You have to set it up
• You can deposit up to
$5000 per year
• (into mutual funds,
stocks or bonds)
• No tax break, but tax
free when you retire
• Can’t touch until 60
• Not liquid
At 10% interest, a $5000 IRA becomes
$226,000 over 40 years!
$10,000 is over $400,000!

4. 401 K Plan
• Set up by employer
• Payroll deduction
• Invested into stock
market
• Lowers tax incidence
• Tax break for
employee
• Employee match
• Not liquid

5. BellRinger in your notes
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

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

7. Economic and financial indicators
• GDP
• Consumer Prices
• Unemployment Rate
– Net importing country, + net exporter
• Budget Balance % of GDP
• Interest rates
• Currency exchange
Let me
check your
health

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

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

10. 2007 Top 10 World Economies

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

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. 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.

22. Net Importers

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

24. 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)

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

26. 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.

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

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

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

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

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

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

33. 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

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

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

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

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

39. Portugal

43. The Business Cycle
• Changes in GDP over time
recovery
prosperity

44. Recession
• 6 + months of negative GDP growth
• 6+ months of positive GDP growth
Prosperity

52. Netherlands GDP 2013
Y = C + I + E + G
$$ in Billions
Consumer Spending = $400
Investment = $104
Government Spending = $131
Exports = $339
Imports = $305
$400 + 104 + (339-305) + 131 = $669 (2003)
Per capita: 669,000,000,000/16,000,000 = $41,812.50
16 million Dutch citizens
4. Calculate the GDP for the Netherlands
5. Are they net exporters or net importers? How do you know?
6. Which country has the largest economy in the world today?
7. Why are recessions usually caused by a
decline in consumer spending?

53. GDP Assignment
1. Which part of the GDP formula is the largest? (It’s the part 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….?)

54. Bellringer
1. Calculate the GDP of Mexico in 2009, where
exports were $200 billion, imports were $250
billion, consumers spent $950 billion, $300 billion
was invested in business, and government spent
$200 billion.
2. Is Mexico a net exporter or net importer?
3. If Costa Rica’s GDP is $48 billion, which country
has a larger economy?
4. How many students are in class today?
5. Do you think the world is getting richer or poorer?

55. Per capita statistics
• Latin for “per each head”
• IOW: Per person
• X per capta =
• On your BR:
5. Calculate cellphones per capita
6. Bank accounts per capita
7. Household vehicles per capita
X
# of people

61. GDP per capita
• Economic indicator: Wealth by country
• Adjust for different population
– Divide GDP by population
GDP $
# of people

63. 2009-2012
Top 24 GDP
richest countries

65. 2009 Mexico vs. Costa Rica
GDP: $1.483 trillion
($1483 billion)
Population:
111 million
GDP per capita:
$13,360
GDP: $48 billion
Population:
4.2 million
GDP per capita:
$11,480

66. 2009 China vs. Germany
GDP: $6 trillion
($6,000 billion)
Population:
1.3 billion
1,300 million
GDP per capita:
$4,600
GDP: $3.6 trillion
($3,600 billion)
Population:
81 million
.081 billion
GDP per capita:
$38,000

67. Show video clip
8. In the last 200 years, describe world GDP per
capita.
9. Do you think this will continue for another
200 years? Explain.

68. Bellringer
1. Describe 4 reasons people lose
their jobs?
2. Calculate the GDP per capita
for Travistan where the GDP is
$100 billion and the
population is 10 million (.01
billion)
3. If the Mexico’s GDP per capita
of $13,360, is Travistan richer
or poorer?
4. What conclusion could you
make from the graph on the
right

71. Why Unemployment?
• You may be
unemployed
• Problem for
society
• Can cause
recessions

72. Think back to US history
• Why was the “Great Depression” so bad?
• How did the government try to fix it?

73. Economic Event’s Name?
Effect on GDP?

74. Unemployment’s effect on GDP
• GDP = C + I + G+ (Exports-Imports)
• Lower Consumer Spending
• Lower investments, causes lower capital for new
businesses
• Lower Exports
• Lower Imports
• Lower Government spending because lower tax
revenues
• GDP per capita?

75. Labor Force
• All 16 years and older who can work
• “LF”

76. Not included in Labor Force
• Children
• Fulltime Students
• Military
• Physically Disabled
• Mentally Disabled
• Prisoners (over 2 million right now!)
• Discouraged Workers
• Retirees

77. Unemployment Rate Calculation
• Simple calculation
• # unemployed in labor force
• # in labor force
Always a %
Higher the % the worse it is for the
country
100

79. Types of Unemployment
• Why do people lose their jobs?
– Or
• Why can’t they find a new job?

80. Types of unemployment
• Frictional Unemployment
• Just entered the labor force

81. Types of unemployment
• Seasonal Unemployment
• “off season”
In July When grapes are growing

82. Types of unemployment
• Cyclical Unemployment
• GDP decline
• Job losses caused by business cycle
• Layoffs during recessions

83. Types of unemployment
• Structural Unemployment
• changes to the economy (show clip)
technology
Changes in taste
Lack of skills
Global
Competition

84. USA Unemployment

85. Arizona’s Unemployment Rate

89. Spongebob unemployment clip
1. What type of unemployment does he experience?
2. Using economic cost vocabulary, why does the
“Mr. Crab” Spongebob?
3. Is Patrick the Starfish technically unemployed?
4. What is the opportunity cost to society if there are
many people like Patrick?
5. Consider the benefits and costs to society if the
government offers payment to people like
SpongeBob who are unemployed.

90. Unemployment types Assignment
1. Divide your paper into fourths
2. Draw a picture or comic to show the four types of
unemployment
3. On the back of the paper, write a few sentences on how you
will guard yourself against each type of unemployment
• Quantitative Easing: find an article on one of the
unemployment types, cite it and summarize its findings.

91. Full Sheet of paper
1. Recessions cause which type of unemployment?
2. After college if you don’t have a job, you will be
experiencing which type of unemployment.
3. The late 90’s are called the “Lost Decade” in Japan, why
do you think they call it that?

92. The Economist indicators 2014
4. Which 3 countries are in a recession? explain
5. Which 3 countries have problems with inflation?
explain
6. Which 5 countries have rapidly growing economies?
Explain
7. Which 3 countries would be safe places to invest?
Explain
8. Which 3 countries have problems with unemployment?
explain
9. Which 2 countries do you think will grow in the future?
Explain
10. Which 3 are net importers? explain