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Gross Domestic Product

Gross Domestic Product. How Big is the Economy?. GDP Growth Through 2005. New GDP numbers for 2006 will be out at the end of March. GDP = C+I+G+X-M. Consumption Investment Govt. spending Exports Imports. Gross Domestic Product.

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Gross Domestic Product

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  1. Gross Domestic Product How Big is the Economy?

  2. GDP Growth Through 2005. New GDP numbers for 2006 will be out at the end of March

  3. GDP = C+I+G+X-M • Consumption • Investment • Govt. spending • Exports • Imports

  4. Gross Domestic Product • GDP is the total market value of all final goods and services that are produced within the borders of a nation in a year.

  5. How large is the GDP? • In 2005 GDP was $12.37 TRILLION • 3.5% GROWTH for 2005.

  6. Three Sectors Make up GDP... • Manufacture Sector • Service Sector • Construction

  7. Things that GDP Measures: Compares Countries • Germany • Japan • Switzerland • US • WHO HAS THE LARGEST GDP? • WHO HAS THE BEST GDP per CAPITA?

  8. GDP of Selected Nations

  9. BUT! • There is one country that has a higher GDP per capita than the US. • WHAT IS IT?

  10. THE COUNTRY IS …. • LUXEMBOURG! • GDP per capita: $43,000 • MISLEADING STATISTIC! • GDP: 15.9 BILLION • Population 442,000

  11. East Timor Somalia Sierra Leone Malawi Tanzania Burundi All the above are beneath $500 a year The Congo Comoros Eritrea Ethiopia Afghanistan All of this column are under $700 a year Poorest Countries of the World

  12. The Poorest (LDC)

  13. What are final goods and services? • Things that are produced and services that are performed that are not used to create other goods and services.

  14. Final Goods: • Film for personal pixs. • Hair cuts. • Clothes. • Anything consumed.

  15. GDP is determined by MARKET VALUE. • Whatever is actually paid. • GDP includes total money paid for final goods.

  16. Intermediate goods are used to produce another good. Intermediate goods are left out of GDP. Final Goods vs. Intermediate Goods and GDP

  17. Difference between GNP and GDP? • Lowell is a comedian and U.S. citizen. He works in Canada and the U.S. He made $22,000 in the U.S. and $15,000 in Canada. • GNP for U.S. = $37,000; GNP for Canada = $0. • GDP U.S. = $22,000; GDP Canada $15,000.

  18. Juan’s FINAL GOOD. • Juan bought film for $20. He used the film to take pictures for his family and friends. He is the end user of the film - so it is a final good and added to GDP.

  19. Helga’s INTERMEDIATE GOOD. • Helga is a part-time photographer. She is hired to take pictures of a wedding. She bought film for $20 and then sold the pictures for $700. The cost of film is not added to GDP.

  20. What do you think? • Mort is a CPA. He is paid $125 by Pat to fill out his income tax forms. • Mort fills out income tax forms for Pines Funeral Home. The fee is $380.

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