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Similar to Does the us still make anything gdp to dist
Does the us still make anything gdp to dist
- 1. Does the USStill Make Anything? Trade, Unemployment, and Gross Domestic Product
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- 4. Smaller Percentage ofPop Employed in Manufacturing
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- 6. How Much “Stuff”Does the US Produce? (see chapter 10)
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- 9. The Circular-Flow Diagram Marketsfor Factors of Production Household s Firms Income (=GDP)Wages, rent, profit (=GDP) Factors of production Labor, land, capital Spending (=GDP) G & S bought G & S sold Revenue (=GDP) Markets for Goods & Services
- 13. Why Do WeCare About GDP? • Large GDP afford better schools, cleaner environment, health care… • Many indicators of the quality of life are positively correlated with GDP.
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- 15. Share of WorldEconomy
- 16. Much Work ForChina To Do…
- 17. So what isGross Domestic Product?
- 18. Gross Domestic Product (GDP) GrossDomestic Product is the market value of all final goods and services produced within a country in a given period of time
- 19. …the market valueof all final goods & services produced within a country in a given period of time. Gross Domestic Product (GDP) Is… Market prices Same units, value to buyer and seller No market value excluded from GDP i.e. housework you do for yourself.
- 20. …the market valueof all final goods & services produced within a country in a given period of time. Gross Domestic Product (GDP) Is… Final goods: intended for the end user Intermediate goods: inputs to produce other goods Final goods include intermediate goods Pbread = Pwheat + Pwater + Psugar + Plabor…
- 21. Aside on finalgoods… Family Cooking Night Intermediate Goods Final Good Final Goods If sold to consumer… Family is “end user”
- 22. …the market valueof all final goods & services produced within a country in a given period of time. Gross Domestic Product (GDP) Is… Goods i.e. Candy bars, bicycles, t-shirts Services i.e. cell phone service, lawn mowing (if purchased), dry-cleaning…
- 23. …the market valueof all final goods & services produced within a country in a given period of time. Gross Domestic Product (GDP) Is… Currently produced goods, not goods produced in the past.
- 24. …the market valueof all final goods & services produced within a country in a given period of time. Gross Domestic Product (GDP) Is… Measures production within a country’s borders Not who, but WHERE! If Activity Takes Place In US
- 25. …the market valueof all final goods & services produced within a country in a given period of time. Gross Domestic Product (GDP) Is… Usually a year or a quarter (3 months)
- 26. In each ofthe following cases, determine if it would be counted in Gross Domestic Product. A. Caroline goes to the store a buys chocolate chip cookies to eat. B. Bob goes to the store and buys chocolate chip cookies for his catering business to include in an order C. Jim mows his own lawn D. Nancy pays someone to clean her house E. Chemours dumps GenX into the Cape Fear River polluting the river What counts
- 27. In each ofthe following cases, determine if it would be counted in Gross Domestic Product. What counts
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- 29. GDPUS = Y= C + NX Y = C + I + G + NX Exports - Imports I + G +
- 30. The Components ofGDP Y = C + I + G + NX Output, measured with GDP =
- 31. U.S. GDP andIts Components, Q2 2019 –1,778 11,751 11,366 45,538 $64,874 per capita –2.7 17.6 17.0 68.1 100.0 % of GDP -578 3,819 3,694 14,800 $21,734 billions NX G I C Y $21.7 trillion (2.1% growth, annual rate, adv. est.) Import more than we export
- 32. Components of GDP -5000 0 5000 10000 15000 20000 25000 Billionsof2012Dollars Componentsof GDP GCEC1 GPDIC1 PCECC96 NETEXP
- 33. Consumption (C) is totalspending by households on g&s. • Note on housing costs: • Renters and Homeowners both “consume” “housing services”
- 34. Consumption (C) • Renters: Cincludes rent payments. • Homeowners: C includes the “imputed rental value” of the house
- 35. Gov’t counts homeowneras both • Landlord • Renter Renter Landlord Rental Expense = Rental income And… rental expense (imputed rent) counted in consumption
- 36. Consumption (C) – “asif” renting their home (from themselves) – Not the purchase price or mortgage payments • Purchase of home is “investment” which produces “housing services” • Renters: C includes rent payments. • Homeowners: C includes the “imputed rental value” of the house
- 37. Investment (I) is totalspending on goods that will be used in the future to produce more goods and services. includes spending on capital equipment (e.g., machines, tools) structures (factories, office buildings, houses) inventories (goods produced but not yet sold) Note: “Investment” does not mean the purchase of financial assets like stocks and bonds.
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- 39. House Produces “Housing Services” Consume theseeach night part of Consumption “C” Produces Housing Services Good that produces more G&S Investment “I” If you rent: “rent” If you own: “imputed rent”
- 40. Government Purchases (G) isall spending on the g&s purchased by govt at the federal, state, and local levels. G excludes transfer payments, such as Social Security or unemployment insurance benefits. They are not purchases of g&s.
- 41. Net Exports (NX) NX= exports – imports • Exports represent foreign spending on the economy’s g&s. • Imports are the portions of C, I, and G that are spent on g&s produced abroad. • Adding up all the components of GDP gives: Y = C + I + G + NX
- 42. Y = C+ I + G + NX GDP, National Income, Total Expenditure, Total Output… Purchases of G&S by households And imputed rent… Purchases of goods to be used to make more goods. NOT stocks and bonds!!! Purchases of G&S by governments Not transfer payments = Exports – Imports Purchases by foreigners and subtract foreign stuff we buy
- 43. In each ofthe following cases, determine how much GDP and each of its components is affected (if at all). A. Debbie spends $200 to buy her husband dinner at the finest restaurant in Boston. B. Sarah spends $1800 on a new laptop to use in her publishing business. The laptop was built in China. C. General Motors builds $500 million worth of cars, but consumers only buy $470 million worth of them. D. Jane spends $1200 on a computer to use in her editing business. She got last year’s model on sale for a great price from a local manufacturer. GDP and its components
- 44. GDP and itscomponents
- 45. GDP and itscomponents
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- 47. GDP over time •Which is worth more? Did you value each in dollars? Same thing for GDP across time, value of dollar changes, need constant dollar…
- 48. Changing Dollar Value •1950 = Today = Need to use a “constant” dollar to compare values across time! PCoke = $.05 PCoke > $1.00
- 49. Real versus NominalGDP Nominal GDP values output using current prices. – Not corrected for inflation – Changing prices obscure changes in Q produced – Need to hold P constant to see ΔQ Real GDP values output using the prices of a base year (2012?). – RGDP is corrected for inflation – Use RGDP to measure changes in output
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- 51. Not Perfect –Why Use It? • How do you measure happiness? – No accepted standard • Income isn’t everything… … but more income can do what’s important • Takes $ to provide: – Healthcare – Food – Protect the environment • “Money isn’t everything, but given the choice, I’ll take rich”
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- 56. GDP Per CapitaGrowth
- 57. GDP and Scale •GDP measures economic activity – Output tends to be larger with larger states (or nations) • Scale by population • GDP per Capita is measure of Standard of Living
- 58. Real vs. NominalGross Domestic Product
- 59. NGDP, RGDP, Inflation •Insert notes here
- 60. Takeaways • “Pile ofStuff” – memorize that long wordy defn to know what is included – Some items left out • Y = C + I + G + NX – What is the exception for each component – Which component is the largest – How does inflation mess up comparing GDP over time? Which measure should we use? • After correcting for population, we use GDP per capita to measure standard of living