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DPQ

DPQ. Capital gains tax?. What’s a second?. 1/25 Test Results. Things to know from last week. Things to know from last week. Supply side economics. Things to know from last week. Supply side economics Laffer Curve. Things to know from last week. Supply side economics Laffer Curve

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DPQ

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  1. DPQ

  2. Capital gains tax?

  3. What’s a second?

  4. 1/25 Test Results

  5. Things to know from last week

  6. Things to know from last week • Supply side economics

  7. Things to know from last week • Supply side economics • Laffer Curve

  8. Things to know from last week • Supply side economics • Laffer Curve • Keynesian economics

  9. National output

  10. Fallacy of Composition

  11. Fallacy of Composition • The mistaken assumption that what applies to a part applies automatically to the whole

  12. Fallacy of Composition • The mistaken assumption that what applies to a part applies automatically to the whole • Example?

  13. Fallacy of Composition • The mistaken assumption that what applies to a part applies automatically to the whole • Example? • “Saving” jobs in the U.S. auto industry

  14. Fallacy of Composition • The mistaken assumption that what applies to a part applies automatically to the whole • Example? • “Saving” jobs in the U.S. auto industry • Obama spent at least $85 billion to bail out GM and Chrysler

  15. Fallacy of Composition • The mistaken assumption that what applies to a part applies automatically to the whole • Example? • “Saving” jobs in the U.S. auto industry • Obama spent at least $85 billion to bail out GM and Chrysler • But how many jobs elsewhere did it cost?

  16. Why would auto bailout cost jobs elsewhere?

  17. Why would auto bailout cost jobs elsewhere? • Everything the government spends is taken from somebody else

  18. Why would auto bailout cost jobs elsewhere? • Everything the government spends is taken from somebody else • The taxes to support above market-rate UAW wages and benefits could have been used to support the next Google or Apple

  19. Why would auto bailout cost jobs elsewhere? • Everything the government spends is taken from somebody else • The taxes to support above market-rate UAW wages and benefits could have been used to support the next Google or Apple • Government is notoriously inefficient

  20. Measuring National Output

  21. Measuring National Output • GDP: gross domestic product

  22. Measuring National Output • GDP: gross domestic product • GNP: gross national product

  23. Gross National Product • The sum total of all the goods and services produced by the country’s people in any given year, wherever they may be located

  24. Gross Domestic Product

  25. Gross Domestic Product • The sum total of all goods and services produced within a nation’s borders including that by foreign nationals

  26. Gross Domestic Product • The sum total of all goods and services produced within a nation’s borders including that by foreign nationals • GDP is the preferred measurement of contemporary economists, used by the U.S. since 1992

  27. The two main components of GDP

  28. The two main components of GDP • Private consumption and public sector spending

  29. The two main components of GDP • Private consumption and public sector spending • In 2010, U.S. GDP was $14.7 trillion

  30. The two main components of GDP • Private consumption and public sector spending • In 2010, U.S. GDP was $14.7 trillion • Private consumption was $10.4 trillion

  31. The two main components of GDP • Private consumption and public sector spending • In 2010, U.S. GDP was $14.7 trillion • Private consumption was $10.4 trillion • Private investment was $1.8 trillion

  32. The two main components of GDP • Private consumption and public sector spending • In 2010, U.S. GDP was $14.7 trillion • Private consumption was $10.4 trillion • Private investment was $1.8 trillion • Government spending was $3 trillion, about 20%

  33. Hey, wait a minute!

  34. Hey, wait a minute! • Problem 1: The totals are $15.2 trillion, not $14.7 trillion

  35. Hey, wait a minute! • Problem 1: The totals are $15.2 trillion, not $14.7 trillion • Problem 2: Federal budget alone in 2010 was $3.69 trillion

  36. Common GDP Formula GDP = C + I + G + (X − M) C is consumption I is gross investment G is government spending X is exports M is imports

  37. Top 5 GDP Nations

  38. Top 5 GDP Nations • U.S.................$14.6 trillion • PRC (China)......$5.7 trillion • Japan...............$5.3 trillion • Germany..........$3.3 trillion • France.............$2.6 trillion

  39. Top 5 GDP Nations, Per Capita

  40. Top 5 GDP Nations, Per Capita • Luxembourg • Norway • Qatar • Switzerland • Denmark

  41. Top 5 GDP Nations, Per Capita • Luxembourg • Norway • Qatar • Switzerland • Denmark • #10: United States

  42. Top 5 GDP Nations, Per Capita • Luxembourg • Norway • Qatar • Switzerland • Denmark • #10: United States • #95: China

  43. “Figures often beguile me, particularly when I have the arranging of them myself; in which case the remark attributed to Disraeli would often apply with justice and force: ‘There are three kinds of lies: lies, d**n lies and statistics.’" Mark Twain's Own Autobiography: The Chapters from the North American Review

  44. Unintended Consequences “Chili’s Feels Heat to Pare Costs” Wall Street Journal, 1/28/11

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