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# Macro gdp

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### Macro gdp

1. 1. BellRinger on your white board 1. Who do you think the richest person on your street is? 2. How do you know? 3. Predict the country that has the world’s largest economy. We will take some notes today
2. 2. Finished with Microeconomics • Microeconomics – study of individuals and the economy • Macroeconomics – study of large organizations and countries and the economy • Finance – study of investment and credit
3. 3. Comparing classes? • On your white boards, what 3 ways could I compare the economies of my 5 economics classes?
4. 4. Gross Domestic Product • A measure of a country’s economy in a given time (usually a year or quarter)
5. 5. 2007 Top 10 World Economies
6. 6. How do we calculate GDP?
7. 7. Parts of GDP • Write something new you bought last week • All consumer spending on new items within a country in a certain year, month or quarter
8. 8. Parts of GDP • All investment within a country in a certain year, month or quarter • IOW: business spending \$\$ on capital goods • Interest rates?
9. 9. Parts of GDP • All government spending in a country in a certain year, month or quarter • Examples: education, military, roads, healthcare, etc
10. 10. Parts of GDP • All net exports from a country in a certain year, month or quarter • Exports = goods shipped to other countries • Imports = goods brought into a country from another country • USA? Mexico?
11. 11. Net Exporters • A country or territory whose value of exported goods is higher than its value of imported goods over a given period of time. • A net exporter is the opposite of a net importer.
12. 12. Net Importers
13. 13. GDP Calculation Y=C+I+G+E where Y = GDP C = Consumer Spending I = Investment E = Exports - Imports G = Government Spending
14. 14. United States GDP 2003 Y=C+I+E+G \$\$ in Billions Consumer Spending = \$7605 Investment = \$1606 Exports = \$1021 Imports = \$1508 Government Spending = \$2017 \$7605 + 1606 + (1021-1508) + 2017 = \$10,741 (2003)
15. 15. GDP • What economic activity did I leave out? • 2 ways GDP might be misleading?
16. 16. GDP = C + I + G + (Ex – Im) Assuming everything else stays equal, what happens if… US consumers spend 5% more in 2013, than 2012 for the Winter Holidays.
17. 17. GDP = C + I + G + (Ex – Im) Assuming everything else stays equal, what happens if… US government passes \$800 billion healthcare reform bill
18. 18. GDP = C + I + G + (Ex – Im) Assuming everything else stays equal, what happens if… US Students learn about the benefits of saving money
19. 19. GDP = C + I + G + (Ex – Im) Assuming everything else stays equal, what happens if… Bank business lending increases by 7% in 2013
20. 20. GDP = C + I + G + (Ex – Im) Assuming everything else stays equal, what happens if… Mexican citizens demand 15 % fewer US made cars
21. 21. GDP = C + I + G + (Ex – Im) Assuming everything else stays equal, what happens if… The internet is created
22. 22. GDP = C + I + G + (Ex – Im) Assuming everything else stays equal, what happens if… Americans demand 50% more Mexican baked goods
23. 23. GDP = C + I + G + (Ex – Im) Assuming everything else stays equal, what happens if… NBA plays a game in China, afterwards Chinese people demand more US made basketballs
24. 24. GDP = C + I + G + (Ex – Im) Assuming everything else stays equal, what happens if… US Government cuts income tax rates by 2 %
25. 25. GDP = C + I + G + (Ex – Im) Assuming everything else stays equal, what happens if… World Demand for American timber increases
26. 26. GDP = C + I + G + (Ex – Im) Assuming everything else stays equal, what happens if… US military invades Iran
27. 27. Calculate the GDP for Portugal in 2008. (in millions) Consumers spent: \$90,000 Investment: \$40,000 Exported \$50,000 Imports \$90,000 Portugal: 10 million people Currency: Euro Government: \$10,000
28. 28. Portugal
29. 29. The Business Cycle • Changes in GDP over time prosperity recovery
30. 30. Recession • 6 + months of negative GDP growth Prosperity • 6+ months of positive GDP growth
31. 31. 1. GDP Assignment(It’s the part Which part of the GDP formula is the largest? you are the most involved in) 2. How many recessions has Argentina had since 1900? 3. When was their worst one? 4. Why are recessions good for selling inferior goods? 5. Calculate US GDP 2010 Consumers: \$12 trillion Investment: \$1.5 trillion Government: \$2 trillion Exports: \$1 trillion Imports: \$2 trillion 6. Describe US Trade (net….?)
32. 32. Netherlands GDP 2003 Y=C+I+E+G \$\$ in Billions Consumer Spending = \$400 Investment = \$104 Government Spending = \$131 Exports = \$339 Imports = \$305 16 million Dutch citizens \$400 +4. Calculate the GDP for the Netherlands 104 + (339-305) + 131 = \$669 (2003) 5. capita: 669,000,000,000/16,000,000 = \$41,812.50 PerAre they net exporters or net importers? How do you know? 6. Which country has the largest economy in the world today? 7. Why are recessions usually caused by a decline in consumer spending?