What we buy and sell in this country

What we buy and sell in this country has an effect on the overall economy of the United States

GDP Overview

GDP The total market value of all final goods and services produced within the borders of a country in one year.

What does GDP stand for? Gross Domestic Product Gross = Total Domestic = One Country Product = Goods and Services

What does GDP tell us about a country? GDP is an indicator of a country’s health based on spending of the four major components… 1. 2. 3. 4. Consumers Investment/Business Government Net Exports (Exports – Imports)

Equation for GDP C + I + G + NX= GDP 1. Consumer Goods and Services = C *Household purchases (goods and services) 2. Investments/business purchases = I *Purchases by Businesses/companies 3. Government purchases = G *Purchases for military, etc. 4. Net Exports = NX *Exports - Imports

Net Exports • Exports: all the things produced in the United States and sold to other countries (things EXiting the U. S. ) - COUNTS TOWARDS OUR GDP- Because it’s part of our economy • Imports: all the things coming in to the United States produced in other countries (IN(M)) - NOT COUNTED IN OUR GDP- Part of another country’s economy. • Net Exports: Exports – Imports = how much more or less money we are earning through exports vs. spending through imports.

Examples of each type of Spending • Consumer or household purchases – clothes, food, furniture, jewelry, dental checkups, dry cleaning • Investment/Business purchases – factories, equipment, tools, new houses, inventories • Government purchases – new roads, bridges, police and fire protection, national defense, education • Main U. S. Exports – Petroleum, aircraft/spacecraft parts, auto parts, medicine • Main U. S. Imports – Electronic equipment, oil, machines, engines, vehicles

Steps to calculate GDP 1. Go through and label each: C, I, G or Ex/Im 2. List all the C’s, all the I’s, all the G’s and all the Ex/Im in the correct spot 3. Write down the C total, I total, G total and NX total 4. Add C + I + G + NX together for total GDP Don’t forget to label!!!!

Let’s Try one… Good/Service Currency Compone nt C, I or G I Fax Machine 500 pugs Building public pool More Police Officers Blanket 3, 500 pugs 1, 025 pugs 45 pugs G G C C Folder 12 pugs Slim Jim 4 pugs Family run Campground 2, 750 pugs I T-Shirts From China 1, 000 Pugs Import C Good/Service Currency Umbrella 75 pugs Office Supplies 180 pugs Dry Cleaning 90 pugs Lollipop 3 pugs Office chair 125 pugs B-day Cake 100 pugs Stereo speakers 325 pugs Compone nt C, I or G C I C C IPods to Mexico 1, 300 Pugs Export

Finding Total GDP

Finding Total GDP C 45 12 4 75 90 3 100 325 C= 654 pugs I G Nx

Finding Total GDP C I 500 2750 180 125 I = 3, 555 pugs G Nx

Finding Total GDP C I G 3500 1025 G = 4, 525 pugs Nx

Finding Total GDP C I G Nx EX= 1, 300 IM= 1, 000 EX-IM = 300 NX= 300

Finding Total GDP C I G Nx C + I + G +NX = 654 + 3, 555 + 4525 +300 = GDP = 9034 pugs

GDP Percentage of Spending C/ GDP 654 pugs/9034 I/GDP 3, 555 pugs/9034 G/GDP 4, 525 pugs/9034 Nx/GDP 300 pugs/9034 . C = 8% I = 39% G = 50% NX= 3%

Robert Kennedy in 1968 made this comment about GDP in the United States: “Our gross national product…counts air pollution and cigarette advertising and ambulances…It counts the destruction of our Redwoods…Yet it does not allow for the health of our children the quality of their education or the strength of our marriages; marriages neither our wisdom nor our learning; learning neither our compassion nor our devotion to our country which makes life worthwhile. ”

$$$ Happiness GDP is NOT a good indicator of overall wellbeing NOT