Download Measuring the Nation`s Output

Economics 13-1
Measuring the Nation’s Output
Pages 341-348
Measuring the Nation’s Output
pages 341-348
ESSENTIAL QUESTION:
• How and why does the United States
measure economic growth?
•How is Gross Domestic Product (GDP)
measured?
•What are the limitations of the use of
GDP as a measurement tool?
Measuring the Nation’s Output
pages 341-348
GPS STANDARDS:
SSEMA1- Describe the means by which economic
activity is measured.
b.) Define Gross Domestic Product……
l
l
Measuring the Nation’s Output
pages 341-348
• A growing economy means an expanding
economy, one that continues to provide more
people with what they want or need.
• The nation’s economic growth is the key to a
better future for everyone.
l
l
Measuring the Nation’s Output
pages 341-348
• The Gross Domestic Product (GDP)–the dollar
amount of all final goods and services produced within
a country’s national borders in a year–is the single
most important measure of the economy’s overall
economic performance.
• When GDP does not do well, neither does the rest of
the economy.
•Economists devised national income accounting–a
system of statistics and accounts that keeps track of
production, consumption, saving, and investment–to
track overall economic performance.
l
l
Measuring the Nation’s Output
pages 341-348
• This data becomes part of the National
Income and Product Accounts (NIPA) kept by
the U.S. Department of Commerce.
• Even with our expanding debt, the United
States has the highest Gross Domestic Product
in the world.
•In 2001 its GDP reached $9.4 trillion, up from
$9.1 trillion in 2000.
l
l
Measuring the Nation’s Output
pages 341-348
• Gross Domestic Product (GDP), a measure
of national output is computed by multiplying all
final goods and services produced in a 12month period by their prices.
GDP–The Measure of
National Output (cont.)
Figure 13.1
Estimating Gross Domestic Product
l
l
Measuring the Nation’s Output
pages 341-348
• GDP tells nothing about the composition of
output or the impact of production on quality of
life.
• Despite its limitations, GDP is still the best
measure of overall economic health.
• When national economists realized we were
in a recession, they knew it because GDP
(economic growth) moved into the negative
numbers.
l
l
Measuring the Nation’s Output
pages 341-348
What does an increase in GDP
indicate?
That the country has
experienced economic growth.
GNP–The Measure of
National Income
• Gross National Product (GNP) is equal to
GDP plus all payments that Americans receive
from outside the United States minus all
payments made to foreign-owned resources
inside the United States.
•
GNP–The Measure of
National Income
• Which measure of national income would you
be interested in if you were trying to forecast
sales of consumer goods?
•Disposable personal income, which reflects
the amount of money individuals have to
spend.
l
l
Measuring the Nation’s Output
pages 341-348
• What would be the effects of a decline in the
GDP?
• There would be a decline in manufacturing,
spending, or both.
l
l
Measuring the Nation’s Output
pages 341-348
• Why is GDP important?
• It is the best measure of economic health.
Drawing Circular Flow of Economic Activity
Figure 13.3
Circular Flow of Economic Activity
p. 347
• draw figure 13.3 The Circular Flow of Economic Activity
• color the drawing using crayons or markers
• Define or EXPLAIN the following terms below the
drawing on your paper:
1.) GDP
2.) GNP
3.) Net National product
4.) National Income
5.) Personal Income
6.) Disposable personal income
7.) (C) Consumer sector
8.) (G) Government sector
9.) (I) Investment sector
Pages 341-348