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COURSE OUTLINE Unit 1: Fundamentals of Economics Economics and Choice Chapter 1:The Economic Way of Thinking Chapter 2: Economic Systems Chapter 3: The American Free Enterprise Unit 2: Microeconomics Market Economies at Work Chapter 4: Demand Chapter 5: Supply Chapter 6: Demand, Supply, and Prices Chapter 7: Market Structures Unit 3: Types of Business Organizations Chapter 8: Types of Business Organizations Unit 4: Macroeconomics Money and Banking Chapter 10: Money Unit 5: Measuring and Monitoring Economic Performance Chapter 12: Economic Indicators and Measurements Chapter 13: Facing Economic Challenges Unit 6: The Role of Government in the Economy Chapter 14: Government Revenue and Spending Chapter 15: Using Fiscal Policy Unit 7: The Global Economy CP Economics Organizer Chapter 12: Economic Indicators and Measurements The Big Picture: Measuring the Economy The most important measure of an economy is the Gross Domestic Product (GDP), the market value of all goods and services produced within a nation in a given time period. GDP includes spending by households, on durable and nondurable goods and on services; business investment, both fixed investment in capital goods and inventory investment in unsold goods; government spending; and net exports, the value of all exports minus the cost of all imports. Nominal GDP is GDP expressed in prices for the year it was measured. Read GDP is GDP adjusted for changes in the value of currency over time. GDP fails to measure some important things, though. It cannot track nonmarket activities, such as that provided by homemakers. It cannot track the underground economy, and it does not measure quality of life. Other key economic measures are Gross National Product, the value of all final goods and services a country produces in a given period; Net National Product, GNP minus the value of capital goods that became worn out during the time period; National Income, the total income a nation earned from producing goods and services in a given time period; Personal Income, income received by a country’s people in a given time period; and Disposable Personal Income, which is Personal Income minus taxes. Business Cycles and Economic Growth The economy goes through somewhat predictable business cycles of expansion (when GDP increases), peak (the highest level of GDP), contraction (declining real GDP and employment), and trough (the lowest level of GDP and employment). Then the cycle begins again. The forces of aggregate supply and aggregate demand affect the business cycle. The point at which they are equal is called macroeconomic equilibrium. When aggregate demand increases, GDP follows, and an expansion takes place. When it decreases, GDP also follows, and a contraction takes place. Changes in aggregate demand and supply can be brought on by business decision, changes in the interest rate, consumer expectations, and external issues, such as natural disasters. Economic growth takes place from year to year if the real GDP rises. Factors affecting economic growth include natural and human resources, a relatively high capital to labor ratio, and technology and innovation. An increase in productivity leads to an increase in GDP. Economic growth sometimes comes with a cost, especially pollution. Unit Pacing: ____– Read p. 350- 355 _____ – Business Cycle ____—Read p. 358359 _____— Aggregate Demand & Aggregate Supply _____— Economic Growth _____— RETEACHING ACTIVITIES: Section 1-3, Section Quizzes 13 _____— Chapter 12 Definitions Test Key Terms and Phrases: (Reading Assignments) _____– GDP ____ – Read p. 360361 ____—Read p. 368373 ____—Read p. 350373 Chapter 12 TEST Essentials Question: 1. Chapter 16: The Federal Reserve 2. and Monetary Policy Chapter 17: International Trade 3. Unit 8: 4. Personal Finance Chapter 11: Personal Finance & Financial Markets Homework Describe GDP and describe how it is measured. Identify the causes of the changes in the business cycle. Explain aggregate demand and aggregate supply. How do economists measure economic growth? 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. GDP Nominal GDP Real GDP Economic growth CPI Aggregate Supply Aggregate Demand Business Cycle Peak Contraction Trough Recovery Expansion Productivity 14. Macroeconomic equilibrium 15. Business Cycle 16. Standard of living 17. National Income Accounting 18. Consumption 19. Investment 20. Government Spending 21. Net exports 22. Non-market activity 23. Underground economy 24. Quality of life 25. Expenditures approach GPS 1. SSEMA1b 2. SSEMA1c 3. SSEMA1e Course Website: http://vhs.gocats.org/apps/pages/index.jsp?uREC_ID=549730&type=u&pREC_ID=826211 Show What You Know! 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