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So, How do you fix the US debt?


Increase Taxes.
Cut government
spending.
 Cut
jobs
 Cut programs
OR…

Both McCain and
Obama have talked
about CUTTING
taxes.
 Cutting
taxes means
there is more money in
our pocket.
 We’ll spend or invest
that money and make
more jobs for the
economy.
How would these plans work?

According to the Tax
Payers Institute and
the Brookings Institute
in Washington – how
would the Obama and
McCain “plans” work
for the economy?
Barack Obama



Increasing taxes for
corporations and people
who make more than $2million a year.
More spending on
programs to educate
people.
And what about the debt?

INCREASE THE DEBT by
2.8 Trillion.
John McCain



Cut taxes for all
economic classes.
Cut government
spending.
And the debt?
 INCREASE
THE
DEBT BY $5-Trillion!
Three Terms to know about the
US Economy in 2008



Recession
Depression
Inflation
Recession


People HAVE money,
but are afraid to spend
it!
What happens when
people don’t spend
money??
Recession





People get scared about
their futures and don’t
spend money.
That leads to
unemployment.
That leads to less
spending.
That leads to more
unemployment.
That leads to more news
that scares people into not
spending their money.
Recession vs. DEPRESSION


Depression – There is
NO money.
1929 – 1940 in the US
economy.
Can there be a depression again?



Probably not.
More globalization
helps keep money
flowing.
There are government
regulations and
agencies that in 1929
didn’t exist to stop the
Depression from
happening.
Inflation



The price of goods
goes up faster than our
wages!
Our money doesn’t
buy as much.
Choices?
 Work
harder to “keep
up”
 Not being able to buy
as much.
So, how do we know where we
are in the US economy?


Perceptions of people
Statistics
Gross Domestic Product
How Big is the
Economy?
GDP = C+I+G+X-M
 Consumption
 Investment
 Govt.
spending
 Exports
 Imports
Gross Domestic Product
 GDP
is the total market
value of all final goods and
services that are
produced within the
borders of a nation in a
year.
What are final goods and
services?
 Things
that are produced
and services that are
performed that are not
used to create other
goods and services.
Final Goods:
 Hair
cuts.
 Clothes.
 Cupcakes
 Anything
consumed.
Final Goods vs.
Intermediate Goods and
GDP
 Intermediate
goods are
used to
produce
another
good.
 Intermediate
goods are
left out of
GDP.
Juan’s FINAL GOOD.
 Juan
bought a digital camera for
$700. He used the camera to
take pictures for his family and
friends. He is the end user of
the camera - so it is a final good
and added to GDP.
Helga’s INTERMEDIATE
GOOD.
 Helga
is a part-time
photographer. She is hired to
take pictures of a wedding. She
bought the same camera for
$700 and then sold the pictures
for $900. The cost of camera is
not added to GDP.
What do you think?
 Mort
is a CPA. He is paid $125
by Pat to fill out his income tax
forms.
 Mort fills out income tax forms
for Pines Funeral Home. The fee
is $380.
GDP is determined by
MARKET VALUE.
 Whatever
is
actually
paid.
 GDP
includes
total money
paid for final
goods.
Difference between GNP
and GDP?
 Lowell
is a comedian and U.S.
citizen. He works in Canada and
the U.S. He made $22,000 in the
U.S. and $15,000 in Canada.
 GNP for U.S. = $37,000; GNP for
Canada = $0.
 GDP U.S. = $22,000; GDP
Canada $15,000.
Three Sectors Make up
GDP...
 Manufacture
Slice 1
Slice 2
Slice 3
Slice 4
Sector
 Service
Sector
 Construction
How large is the GDP?
 In
2006 GDP
was $13.13
TRILLION!
So, what does that mean for
YOU?

GDP per capita
 $45,845
What country in the world has
the highest GDP per capita?

GUESS???
Luxembourg

GDP per capita:
$104,673

A False Correlation!
 Only
a population of
480,000 people!
#2?


NORWAY!
GDP per capita:
 $83,922
#3 in GDP per Capita?

Qatar
 $72,849
#4?

Iceland
 GDP per

capita
$63,830
#5

Brunei
 GDP per

capita:
$51,005
#6???

THE USA!
Comparison of GDP in the world
The Poorest in GDP
The Poorest Countries GDP

Out of the 179
countries that do
submit data, 36% of
the world’s countries
have people earning
LESS than $1000 a
year.
The poorest?

Zimbabwe
 GDP per

capita
$55 per year.
Why is Zimbabwe so poor?

Corruption of the
government.



Rigged Presidential
elections.
Anyone who has wealth is
accused of crimes and
wealth taken.
A devastating inflation
rate.


US inflation rate: 6%
Zimbabwe inflation rate:
66,000% or 100,500%


Loaf of bread costs $148
40 lbs of Zimbabwe
money = $100 US
Also near the bottom:

Liberia
 $195

Democratic Republic
of Congo
 $166

Burundi
 $128
What do you think will be the
questions for the test?






What is the equation for
the GDP?
What are two ways you
could solve the national
debt?
What would McCain and
Obama do about the debt?
What are the three top
things govt. spends money
on?
Depression, Recession,
Inflation definitions:
What is the national debt