Gross Domestic Product

1. Gross Domestic Product Define GDP and what is included and not included http://www.youtube.com/watch?v=yUiU_xRPwMc

2. Gross Domestic Product • The market value of all final goods and services produced annually in a country • Tells a country how well its economy is doing • GDP measures value using dollars • GDP counts only new production

3. GDP Does NOT include • Secondhand Transactions • Transfer Payments • Stock Market Transactions • Nonmarket Activities • The Underground Economy

4. GDP Counts Only Final Goods • Final Goods • Goods and services sold to the final user • Intermediate Goods • Are goods and services used as inputs for the production of final goods • Not produced for the consumption by the ultimate user

5. Comparing GDPs • Nominal GDP • GDP measured in current prices (grows in 3 ways) • Output rises and prices remain unchanged • Prices rise and output is constant • Both output and prices rise • Problem is to adjust GDP for only changes in output and not price

6. Comparing GDPs • Real GDP • GDP adjusted for changes in prices over time • GDP per Capita • GDP divided by total population

7. Listen and Reflect • NPR’s Planet Money Podcast: Why GDP is like GPA • http://www.npr.org/blogs/money/2011/10/28/141807689/why-gdp-is-like-gpa • Reflection Paper “How GDP is like GPA” • 3-5 paragraphs • Introduction with 2-3 examples • Example explained • Example e • Conclusion

8. Application Activity • http://econedlink.org/1010 • http://boxofficemojo.com/alltime/