Download What does the Nation consume

INTRODUCTION
This lesson focuses on what the nation consumes and how that is
measured by Gross Domestic Product (GDP). In the United States, the
goods and services produced for household consumption account for
about two-thirds of total output measured by GDP.
Gross Domestic Product (GDP) is the value, expressed in dollars, of all final goods and services
produced in a year. Remember, goods are things that we use, touch and see and services are
activities people do for us. The production of these goods and services provides jobs
for people in the economy. The income people earn is then used to consume goods
and services.
Final goods are the goods and services sold to consumers. Intermediate goods are
things that are produced and then used in the production of other goods and services.
For example, the denim produced in mills is used in the production of jeans. In this
example, denim is an intermediate good and the jeans are a final good.
Activity 1
1. Identify the Intermediate Good:
Good
Steel
Automobile
Intermediate
Final
Shirt
Thread
Good
Muffins
Flour
Intermediate
Final
Table
Wood
2. Now think of three of your own examples of intermediate and final goods.
Intermediate Good
Final Good
Activity 2
As stated above, the GDP is the value of all final goods and services produced in a year. The
current GDP for the Unites states is:
GDP in billions of current dollars
2013
2014 (Q3)
16,768.10
17,555.20
To understand what makes up GDP, we are going to study the types of goods and services that
make up a large part of the trillions of dollars of the GDP.
On a piece of paper, make a list of all of the final goods and services you used from the time
you woke up yesterday until you went to bed last night. Items should not be listed more than
once. Be sure to include final goods easily overlooked. For example, how was breakfast
prepared? (Microwave, toaster, refrigerator) Did you turn on the light in the bathroom to shower?
(electricity) Did you use soap, shampoo, toothbrush, and toothpaste?
Look over the list you have just created and think about the large number of goods and services
you rely on to satisfy your wants each day.
Who buys these items?
How does your family obtain most of the goods and services it wants?
Spending by households is called consumption or consumer spending
because the products provide direct satisfaction to consumers. When we
measure GDP, consumer spending represents the largest category. Spending
for consumer goods and services makes up over two-thirds of all spending.
Activity 3
In GDP, the durables category refers to consumer goods that will last longer than three years.
Examples are bikes, CD player, automobiles. Can you think of some more durables?
The nondurable category includes consumer goods expected to last less than three years.
Examples are shoes, hamburgers, and pencils. Can you think of some more nondurables?
Also remember that services are activities people do for us.
Item
Going to the dentist
A computer
Gasoline
Toy
Car Insurance
Jewelry
Magazine
Clothing
Dishwasher
Airline transportation
Durable
Non-Durable
Service