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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” 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 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? 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