Download GDP

BellRinger
1. What do you think is the richest country in the
world today?
2. How do you think economists should measure
a country’s wealth?
We will take some notes today
Finished with Microeconomics
• Microeconomics – study
of individuals and the
economy
• Macroeconomics – study
of large organizations and
countries and the
economy
• Finance – study of
investment and credit
Gross Domestic Product
• A measure of a country’s economy
GDP
• All consumer spending
within a country in a
certain year, month or
quarter
GDP
• All private investment
within a country in a
certain year, month or
quarter
• IOW: (saving)
GDP
• All net exports from a
country in a certain year,
month or quarter
• Exports = goods shipped
to other countries
• Imports = goods brought
into a country from
another country
GDP
• All government
spending in a
country in a certain
year, month or
quarter
• Examples:
education, military,
welfare, social
security, roads,
healthcare, etc
GDP
• What economic activity did I leave out?
• 2 ways GDP might be misleading?
GDP per capita
• Population measuring:
– Divide GDP by population
GDP per capita $s
GDP per capita $s
Luxembourg
57 704
EU (established
15 countries)
28 741
United States
39 732
Germany
28 605
Norway
38 765
Italy
27 699
Ireland
35 767
Spain
25 582
Switzerland
33 678
Korea
20 907
United Kingdom
31 436
Czech Republic
18 467
Canada
31 395
Hungary
15 946
Australia
31 231
Slovak Republic
14 309
Sweden
30 361
Poland
12 647
Japan
29 664
Mexico
10 059
France
29 554
Turkey
7 687
Source: OECD World Economic Factbook, 2006 edition
GDP Calculation
Y=C+I+E+G
where
Y = GDP
C = Consumer Spending
I = Investment
E = Exports - Imports
G = Government Spending
United States GDP 2003
Y=C+I+E+G
$$ in Billions
Consumer Spending = $7605
Investment = $1606
Exports = $1021
Imports = $1508
Government Spending = $2017
$7605 + 1606 + (1021-1508) + 2017 = $10,741 (2003)
Netherlands GDP 2003
Y=C+I+E+G
$$ in Billions
Consumer Spending = $400
Investment = $104
Exports = $339
Imports = $305
Government Spending = $131
16 million Dutch citizens
Calculate
the GDP
Netherlands
$400 +3.104
+ (339-305)
+ 131for= the
$669
(2003)
4. Calculate the GDP/capita
Per capita: 669,000,000,000/16,000,000 = $41,812.50
5. How can GDP be a limited measurement?