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Grab a Calculator

Grab a Calculator. (unless you already have one). Pepperonia & Anchovia. And The Winner Is. Now, Do One On Your Own. You can do it!. Clicker Quiz. 1. GDP is the dollar value of all final goods and services sold in a ___ month period. A) 6 B) 10 C) 12 D) 24.

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Grab a Calculator

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  1. Grab a Calculator (unless you already have one)

  2. Pepperonia & Anchovia

  3. And The Winner Is...

  4. Now, Do One On Your Own. You can do it!

  5. Clicker Quiz

  6. 1. GDP is the dollar value of all final goods and services sold in a ___ month period. • A) 6 • B) 10 • C) 12 • D) 24

  7. 2. Which of the following purchases is included in GDP? • A) A haircut. • B) A used car. • C) An illegal drug. • D) An oil refinery buys oil from a drilling company.

  8. 3. Which best describes GDP? • A) a way to measure inflation • B) a way to measure happiness • C) a dollar value • D) an indicator of what kinds of things we are producing

  9. 4. GDP = __ + I + G + (X-M) • A) A • B) B • C) C • D) D

  10. 5. Which actor in the economy is responsible for most of the investment that occurs? • A) Consumers • B) Businesses • C) Government • D) Military

  11. Is it counted & where??A haircut from Regis at the mall. • A) Yes, consumption • B) Yes, investment • C) Yes, government • D) Not counted

  12. Is it counted & where??The purchase of the scissors used to cut your hair. • A) Yes, consumption • B) Yes, investment • C) Yes, government • D) Not counted

  13. Is it counted & where??A haircut Mom gave you. • A) Yes, consumption • B) Yes, investment • C) Yes, government • D) Not counted

  14. When Mr. Cook buys his Ferrari… • A) GDP & consumption will both rise. • B) Consumption & imports will rise, GDP will stay the same. • C) Consumption & exports will rise, GDP will stay the same. • D) Imports will rise, GDP will fall. • E) GDP will stay the same, and no sectors will be affected.

  15. Independent GDP Work Silently

  16. Answers

  17. Georgia Standard & Today’s Big Question(s) How are we doing? Compared to others? Compared to how we’ve been doing?

  18. Scary! The dollar has lost 56% of it’s value since 1992. Or, a dollar today will buy the same amount of stuff as $0.64 would buy in 1992.

  19. From year to year, a dollar then vs. a dollar now.

  20. Macroeconomics Lesson 3 Inflation Part 1

  21. Inflation Inflation: P , $ value Deflation: P , $ value Stagflation: recession + inflation at same time. For the last 50 years, the U.S. has had an avg. inflation rate of 4% /yr.

  22. Do recessions have any effect on the rate of inflation? If so, what? • Are their any exceptions to your answer? When?

  23. So let’s say • You get a raise of 5% this year. • But inflation was 5% this year. • Your nominal pay rose. • What happened to your PURCHASING POWER??? • IT STAYED THE SAME

  24. Stories of extreme inflation Note those who are helped, and those who are hurt.

  25. Story Time • Once upon a time in Burgerland… • There were only four jobs: • Beefers (cowboys) • Bakers • Burger store managers • Bankers • And only one product… • BURGERS.

  26. For as long as anyone can remember… • The price of a burger has been $1. • All of the burger joints voluntarily charge $1.

  27. Bill the baker wants to expand his business • So he borrows • $10 from Brenda the banker, • at 20% simple interest (fixed rate), • to be paid back in one year. • That’s $12! • What is Brenda’s profit? • How many burgers will Brenda be able to buy with her profits? • (All of the burger joints voluntarily charge $1.)

  28. But, before Bill is due to pay Brenda… • The burger store managers (Bruce, Belinda, Barry, and Bedelia) unexpectedly raise their prices from $1 to $2 a burger!! • Who is hurt by this change of events? • Who is helped? • How could Brenda have kept from getting hurt?

  29. If Brenda had charged • 20% interest • PLUS • the rate of inflation (called an adjustable rate loan) • She would have come out better. • Prices doubled. That’s 100% inflation. • A loan of $10, paid back plus 120% interest would be $22

  30. Unexpected Inflation Hurts: lenders at fixed rates savers at fixed rates fixed-income recipients Benefits: borrowers at fixed rates

  31. Helped, hurt, or neither?? • Service providers fulfilling long-term contracts • Workers with cost-of-living-adjustments in their contracts • Banks that have made fixed-rate loans • Banks that have made adjustable-rate loans • Borrowers of fixed-rate loans • Borrowers of adjustable-rate loans

  32. Helped or Hurt? A Competition

  33. Helped or Hurt? Individual Work

  34. Reminders/Hints • A bond is a loan. • If I buy a bond from Coca-Cola, I’m loaning them $. • They sold me a bond, so they’re borrowing from me. • Dividends are profits paid to stockholders. When prices rise, dividends rise. • Income tax is a percentage of your income. • When prices rise, incomes rise.

  35. Answers

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