Download Economics Part II

Economics
GDP
Productivity in the United States
One of the most important jobs of our
government is to keep a close eye on
our economy
 Have you ever heard someone say, “I
think the economy is doing terribly”
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An economy exists whenever people
get together to make and consume
goods and services, the United States
makes an extraordinary amount of
goods every year

If we take the dollar value of every
single product that is made and add it
together, the final calculation is
known as the gross domestic
product
1996- number reached almost 8
trillion dollars
 2012- $15.68 trillion
 2013-$16.8 trillion
 2014- $17.42 trillion
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http://www.tradingeconomics.com/united-states/gdp
http://data.worldbank.org/indicator/NY.GDP.MKTP.
CD
Whole point to starting a business is
to maximize your profits
 You own a factory
 Your employees are able to
manufacture 2000 items a month at
maximum efficiency

Items are selling well, so you declare
to the staff that you wish the factory
to hit a goal of 2200 items next
month
 Is it possible? Can you do it without
hiring more workers? The answer
may be “yes”

You need your people to become
more productive
 The would mean the benefits to the
firm by making more goods would
exceed the value of the costs

Your company should try to figure
out new ways of becoming more
efficient
 Time has to be used more effectively
 Machines need to be geared to
operate more quickly

Sales will meet the high demand, and
your profits will rise
 The best thing is, you didn’t have to
spend any more money to produce
more
 The is rarely possible since most
technology is embodied in new
capital goods

As a country, we also want to
become more productive
 The United States needs to produce
more goods this year than it did last
year
 If we do, there will be more jobs for
our citizens, more profits for our
companies

The gross domestic product is
perhaps the most important piece of
information calculated by the
government
 It is vital that our country’s
companies and citizens continue to
become more productive in their
work

GDP is calculated by using a formula
 By adding together the four things, a
dollar value that equals our GDP can
be reached:
 C + I + G + (X-M) = GDP

C + I + G + (X-M)
C= Consumer spending
 I= Investments by business
 G= Government spending
 X=Exports
 M=Imports

Of the four categories in GDP, our
consumer spending is by far the
largest
 In 1996- 65% of the 8 trillion dollar
GDP comes from the consumer
spending
 Today, this figure is more like 70%

(some feel this is misleading- that this is a
mixture of consumer spending and health care
payments)
That is why the United States is
considered the most fertile market on
earth and often referred to as a
“consumer society.”
 Is our spending all on products made
in the United States? Are we
spending money on products that
have been imported?
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GDP can also help us figure out how
much each citizen in our country
produces
We divide our population by our current
GDP to get per capita GDP
The value of a dollar changes every year,
we compensate for inflation by figuring
out our real (or per capita) GDP
http://knoema.com/sijweyg/gdp-per-capitaranking-2015-data-and-charts