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Economics Pres - Keeping Score(pp)
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Economics Pres - Keeping Score(pp)

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This Presentation gives the most common ways of measuring the health of a nation's economy.

This Presentation gives the most common ways of measuring the health of a nation's economy.


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  • 1. KEEPING SCORE OrBigger, Better, Faster, And More Powerful
  • 2. 1. GDP Gross Domestic ProductThe total value of all the goods and services produced within a country or economy
  • 3. 1. GDP Why does this matter?Because how much we consume is limited by how much we produce.
  • 4. 1. GDP Why per capita? (GDP divided by its population)Example: Paraguays GDP goes up 2%. Cool! Paraguays population goes up 5%... ...and Paraguay is actually getting poorer, because its not producing enough to keep up with the extra people.
  • 5. 1. GDPExample: working at McDonalds Average FT worker –  Average FT worker – United States Paraguay − 40 hours/week − 40 hours/sem. − $7.50/hr − G.1.6million/mes − $1200.00/month − G.10000/hr − Current exchange: $2.38/hr
  • 6. 1. GDPExample: working at McDonalds Average FT worker –  Average FT worker – United States: Paraguay (Current $7.50/hr exchange): $2.38/hr − $60 pair of − $60 pair of sneakers takes sneakers takes 8 work hours. more than 25 work hours. − $5 combo meal at McDs costs − $5 combo meal at McDs costs 2 40 minutes. hours and 6 minutes of work.
  • 7. 1. GDP Average FT worker –  Average FT worker – United States: Paraguay: Annual Annual Purchasing Purchasing Power: Power: $47,184.48 $4,533.10 Afghanistan´s GDP per capita is less than $950.00. They have almost 200,000 cases of Hansens disease (leprosy). A $3 antibiotic will cure a mild case. A $20 regimen will cure a more severe case. The World Health Organization provides the drugs for FREE. The Afghani health care infrastructure is so war-torn that it cannot identify and treat the ones who need care.
  • 8. 1. GDP Average FT worker –  Average FT worker – United States: Paraguay: Annual Annual Purchasing Purchasing Power: Power: $47,184.48 $4,533.10 200,000 Afghanis are horribly disfigured by a disease that costs $3 to cure. This is what it means to make $950 per year.
  • 9. 2. UnemploymentThe fraction of able workers who want to work, but cant find a job. A countrys GDP has to grow at least 3%, or else unemployment will rise. (Okuns Law)
  • 10. 3. Poverty RateThe Poverty Line is the least possible amount of money necessary to buy the absolute basics for subsistence.The Poverty Rate is the percentage of people whose incomes are below the poverty line.
  • 11. 4. Income Inequality The Gini Index0 = Total equality (every worker, regardless of field, skill, or expertise, makes exactly the same amount of money)100 = Total inequality (all income is generated and earned by one person) Gini trends are measured over time.
  • 12. 4. Income Inequality United States Gini  Over time, the US has scores: been getting more disparate between − 1970: 39.4 income levels. − 1980: 40.3 − 1990: 42.8  The gap between high- − 2000: 46.2 income earners and low-income earners is − 2010: 47.0 growing.
  • 13. 4. Income Inequality
  • 14. 5. How BIG is YOUR Government?  $ amount of all (local, federal, and between) government spendingGovernment size = -----------------------------  GDP
  • 15. 5. How BIG is YOUR Government?  $3,600,000,000,000 spent by ($3.6 trillion USD) US Federal Government United States ----------------------------- Government size =  $14,590,000,000,000.00  ($14.59 trillion USD) – 2010 US GDP
  • 16. 5. How BIG is YOUR Government?  $3,600,000,000,000 spent by ($3.6 trillion USD) US Federal Government 24.67% = -----------------------------  $14,590,000,000,000.00  ($14.59 trillion USD) – 2010 US GDP
  • 17. 5. How BIG is YOUR Government?  $3,603,000,000.00 spent by ($3.6 billion USD) Paraguayan Government 19.66% = -----------------------------  $18,330,000,000.00  ($18.33 billion USD) – 2010 Py GDP
  • 18. 6. Deficit and Surplus  Surplus when the government collects more tax money than it spends. Budget  Deficit when the government spends more than it collects, and cannot pay for itself.
  • 19. 6. Deficit and Surplus  Surplus when a country produces enough to export, to pay for what it imports.Current  Deficit when a countryAccount cannot produce enough to export, to pay for all that it imports.
  • 20. 7. Simple DemographicsWhy (if all the above were equal) does the US government spend a larger percentage of its budget on Social Security than Paraguay?
  • 21. 7. Simple Demographics The United States is  Paraguay is “dying “aging”. young” − Less workers to pay − HALF of pop. is under for social programs the age of 25. for retirees. − Less than 10% of the − US health care, over pop. reaches the age last 20 years, of 60. extended life − At near-40% expectancy by 8 to 10 unemployment, not years. enough people − 25% of pop. is under contribute the tax the age of 25. revenue necessary to support social − 13% of pop. over age programs. 65, and growing.
  • 22. 7. Simple Demographics So...  Paraguay is “dying − Less money for young” pension and − HALF of pop. is under the age of 25. health care initiatives for − Less than 10% of the pop. reaches the age the elderly. of 60. − More money − At near-40% unemployment, not mandated for enough people educational contribute the tax initiatives. revenue necessary to support social programs.
  • 23. 7. Simple Demographics So...  Paraguay: − Less money for − 12% govt pension and spending for health care education initiatives for − 10% govt the elderly. spending on − More money health care mandated for educational initiatives.
  • 24. 7. Simple Demographics USA  Paraguay: − 40% govt − 12% govt spending on spending for Social Security education and Medicare − 10% govt for the elderly spending on − 3% govt health care spending for education
  • 25. The Point? Remember the 5th Premise?A country is only as healthy and productive as its people.