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American Government and Economics Mr. Miller It is the “whole” economy A view of our economy when you consider all economic indicators of growth….. Some indicators we will be learning about include: ◦ ◦ ◦ ◦ ◦ ◦ ◦ ◦ Business Cycles GDP Unemployment Inflation Poverty Investment Government Consumers The Economy moves from periods of growth to periods of contraction. This is known as the Business Cycle The Business Cycle is just like a rollercoaster ◦ Highs, lows, ups, downs, etc… Expansion – period of economic growth - People have jobs, consumers are spending money 2. Peak – the height of an economy’s growth. Growth has stopped. 3. Contraction – also known as a Recession - Following a Peak, a period of economic decline - People are losing jobs, consumers stop spending money 4. Trough – the lowest point of an economic contraction, high unemployment 1. Depression - When a recession lasts longer than 18 months. ◦ Unemployment rate greater than 12% Poncho and the business cycle... The total value of ALL FINAL goods and services produced within a country’s borders in one year…. In 2009, the GDP of the U.S.A. was…. 14.14 Trillion 14,140,000,000,000 1. Final Goods – goods that are produced and sold and eventually consumed in some capacity. Example – Chips Ahoy cookies 2. Intermediate Goods – goods used to make other goods. Example – sugar used to make Chips Ahoy cookies. GDP indicates the strength of a country’s economy and standard of living…. Higher GDP means citizens are “doing” well….have jobs, money, in good health, etc…. Standard of Living – quality of life. How “good” it is to live in a particular country….look at posters on my wall! 1. GDP per capita – GDP “per person” ◦ this is a measure of one person’s standard of living ◦ Calculated by dividing GDP by the population of a country Example – U.S.A. GDP = 14 trillion Population of U.S.A. = 300 million 14 trillion / 300 million = $46,666 So, the “average” person in the United States produces approximately $46,666 worth of goods/services each year. Black Market- buying/selling of goods/services illegally – not paying taxes to the government for the purchase of the good/service - ex. – bootleg movies Non-Market Activities - goods/services that people make/do for themselves - ex. Mowing your lawn Rank Country GDP (2009) United States14,2 trillion People's Republic of China 8.8 Trillion Japan4.1 Trillion India3.5 Trillion Germany2.8 trillion UnitedKingdom2.13 trillion Russia2.12 Trillion France2.11 trillion Brazil2.0 Trillion Italy1.76 Trillion Same Countries- GDP Per capita United States - $46,400 China - $6,600 Japan – $32,600 India - $3,100 Germany - $34,100 United Kingdom- $35,200 Russia - $15,100 France - $32,800 Brazil – $10,200 Italy - $30,300 GDP United States of America (14.2 Trillion) GDP per capita Liechtenstein-$122,000 Population – 35,002 Population of Delaware – approximately 900,000 0.9 times the size of Washington, D.C. 1. Mr. Miller paying a student to mow the lawn at his house 2. Mr. Miller paying a lawn-care business to mow the lawn at his house 3. Mr. Miller cooking a spaghetti dinner for his wife. 4. Mr. Miller taking his wife out to Olive Garden for a fancy Italian dinner 5. Mr. Miller paying a student to baby-sit his five kids while he takes his girlfriends to the movies 6. Buying clothes from Ebay. 7. Buying bootleg movies from “Charlie” ‘round the way. 8. Selling home-grown vegetables to your neighbor 9. Buying organically grown vegetables from the grocery store 10. Buying clothes from Target.com Window glass in new automobiles Dresses Bread Lumber in a new house Screws used in a cruise missile New factory Flour for making bread Cloth for making dresses Manicures Cruise missile Increase in automobile inventory 1. 2. 3. 4. 5. Business Cycle Article/Questions List 3 Original examples of Final goods List 3 Original examples of Intermediate goods Describe 2 original situations where the good/service described WOULD be counted in this year’s GDP. Describe 2 original situations where the good/service described WOULD NOT be counted in this year’s GDP.