The economists on Frontline said that President Bush's fiscal policy led to problems and the recession. They believed that tax cuts and spending increases under Bush led to growing budget deficits, which contributed to the recession. The document then provides notes on estimating GDP, including definitions of GDP, how it is calculated using the expenditure and income approaches, and what is included in national income accounts.

1. Do Now
What did the economists
featured on Frontline say the
problem was with President
Bush’s fiscal policy? What
events or policies did they think
led to the recession?

2. AGENDA
1. Do Now
2. Finish Frontline and Review Q’s
3. Estimating GDP Notes

3. Gross Domestic Product
 GPD- the market value of all final goods and services
produced in the nation during a given period, usually a
year
 GDP includes production carried out by foreign
businesses in the US and excludes foreign production by
US businesses.
 GDP is used to track a countries economy over time or
compare different economies at the same time.

4. National Income Accounts
 Organize huge quantities of data collected from a
variety of sources across America.
 The federal government summarizes and and reports
these data periodically.
 These accounts keep track of the value of final goods
and services.
 Only final goods and services are included in GDP. NO
DOUBLE COUNTING

5. Calculating GDP- Based on the
Expenditure Approach
 Adds up the spending on all final goods and services produced in the
economy during the year.
 4 categories: consumption, investment, government purchases, and
net exports.
 Consumption- purchase of final goods and services
 Investment- spending on new capital goods and additions to
inventories.
 Government Purchases- spending on goods and services by all levels of
government. (excluding Social Security, Welfare, and Unemployment)
 Net Exports- the value of the countries exports minus the value of its
imports.

6. GDP Based on Income Approach
 Aggregates income arising from production.
 Aggregate income- equals the sum of all the income
earned by resource suppliers in the economy during a
year.
 Calculates value added at each stage of production (no
double counting)
 The sum of the value added at all stages equals the
market value of a final good. The sum of the value
added for all final goods and services equals GDP based
on income approach.