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Lecture 3 measuring a nation's income
- 1. Macroeconomics Lecture 3 Measuring a Nations’s Income GDP
- 2. Questions?
- 3. 1. Name the six types of capital 2. What type of capital is water? 3. What were the two inventions the Wright Brothers developed? 4. What is capital? 5. Are entrepreneurs the same thing as inventors? 6. Name two elements of cultural capital. 7. What incentivized the development of kerosene? 8. What is horizontal fracking? 9. What type of capital are you developing when you go to college? 9. What type of capital are you developing when you write a book? 10. If you want to change someone's economic system, what should you change? 11. What does GDP stand for? 12. What is the definition of GDP? 13. What is GDP per capita?
- 5. 1978 China Changed Worldview Deng Xiaoping
- 8. GDP Per Capita Saudi Arabia $25,000 India $1,500 Pakistan $1,261 Bangladesh $800 16.7 times more 19.8 times more 31.2 times more
- 10. Most people Most of the time Economics is a Soft Science
- 11. GDP Gross Domestic Product The market value of all final goods and services produced in a country in a given time
- 12. GDP How much stuff a country makes
- 13. GDP Per Capita GDP Per Person Average GDP
- 16. MarketValue One Apple plus One Orange = Three Dollars
- 17. All Everything except... Stuff you don’t sell
- 21. Goods Services
- 22. Produced New Stuff Does not include the sale of used goods
- 23. Within a Country
- 24. In a given period of time Year Y/Y Quarter Q/Q Annualized: Q x 4
- 25. Percentage Change new number - old number old number
- 26. ThisYear - LastYear LastYear ThisYear = 75 LastYear = 60 Percentage Change?
- 27. 75 - 60 60 15 60 .25 or 25%
- 29. GDP = C = Consumption I = Investment G = Government X = Exports M = Imports
- 30. GDP = C + I + G + (X - M)
- 31. Consumption Spending by households on goods and services, except new housing
- 32. Investment Spending on capital equipment, inventories, and structures, including new housing
- 33. Government Spending on goods and services from local, state, and federal governments.
- 35. Net Exports Foreigners buying exports minus domestic residents buying foreign goods
- 36. What is GDP? C = 105 I = 40 G = 25 X = 30 M = 20
- 37. What is GDP? C = 105 I = 40 G = 25 E = 30 I = 20
- 38. GDP = C + I + G + (X - M) = 105 + 40 + 25 +(30-20) = 105 + 40 + 25 +10 = 180
- 39. GDP per Person GDP per Capita Average GDP per person
- 40. GDP $75 trillion Population 7.5 billion GDP Per Capita $10,000
- 41. GDP $18 trillion Population 318 million GDP Per Capita $56,600 United States
- 42. GDP $11 trillion Population 1.4 billion GDP Per Capita $7,857 China
- 45. Intellectual Financial Physical Human Culture Entrepreneur trust knowledge skills personality health relationships natural resources time buildings equipment things than make things money and risk savers and borrowers time is money (1+r)n insurance limited liability corporations ideas technology methods
- 46. Cultural Capital Determines the relationship of entrepreneurs to capital
- 47. Human Capital
- 48. I look for three things in hiring people. The first is personal integrity, the second is intelligence, and the third is a high energy level. But of you don’t have the first, the other two will kill you. - Warren Buffett, CEO, Berkshire Hathaway
- 50. Trust Knowledge and Skills Health and Nutrition Social Relationships Human Capital