Slide 1
Activator Chapter 23* Create a chart and predict a figure for
each of the following Trend1900-19202011PredictionActual
FigurePredictionActual FigureAverage Life Expectancy (years)Per
Capita IncomePoverty Rate (percent of US Households)High School
Completion (percent of adults)
47$520(5609.15 in todays dollars)
40%22%78.37$48,14715.1% (46.2 million)92%1
IncludedExcludedMicroeconomics - How Much Does Coach L Get Paid
Per Year? Around $65,000 per year
Macroeconomics - How Much Does Everyone In The US Get Paid Per
Year?
15.68 Trillion DollarsChapter 23 Measuring a Nations
IncomeMacroeconomics the study of the big picture of the economy;
the economy as a whole.i.e. Federal Reserve and the Federal
Government, inflation, unemployment, and economic growth
Gross Domestic Product and Growth (Ch. 12)Gross Domestic Product
(GDP) the total market value of all final goods and services
produced within a countrys borders in a given period of time.
Gross Domestic Product and GrowthGDP measures the economys total
income Total income = total spending
Gross Domestic Product DefinedMarket dollar value prices of
goods and services F150 - $35,000, Apple $1.00
Gross Domestic Product Definedof all all items produced in the
economy and sold legally in commercial markets. Pears, grapefruit,
books, movies, etc.
Gross Domestic Product Definedfinal only value of final goods
and services (excluding intermediate products). Included
Cheeseburger(output) Excluded Cow parts (inputs)
Gross Domestic Product Definedgoods and services Tangible and
intangible products Included - Hair products and haircuts
Gross Domestic Product Defined produced only includes new goods
and services produced currently. GM sells new car vs. used car
Included - New car Excluded - used car
Gross Domestic Product Definedwithin a country only measures
production within a countrys borders. Included - Japanese company
in the U.S. Excluded - Am. Company in Japan
Gross Domestic Product Defined In a given period of time
measured within a specific time Usually a year or quarter (three
months)
4 Components of GDPFour components:GDP = C + I + G + NX
C - Consumption of goods and services by households (Consumer
Spending)Accounts for 70% of GDPI - Investments by businesses in
goods and services (Business Spending)Accounts for 15% of GDPG -
Government goods and services (Government Spending)Accounts for 20%
of GDPNX - Net exports or imports of goods and services, (Foreign
Spending) *Exports (X) Imports (M)*Accounts for -5 of
GDPConsumption
InvestmentGovernmentNet Exports
GDP Google
http://www.google.com/publicdata/explore?ds=d5bncppjof8f9_&ctype=l&met_y=ny_gdp_mktp_cd
Application - Calculating GDP ProductQuantity Price (per 1
unit)Dollar Value ConsumptionCar SalesFast Food SalesPersonal
Computers101250$400$200$100____________________________________________________________________________________InvestmentTractorsBusiness
ComputersTelecommunications151045$20$30$200___________________________________________________________________________________GovernmentMilitary
PersonnelHelicoptersRoads521$50,000$200,000$300,000______________________________________________________________________________Net
Exports*Figure this amount by taking Exports minus Imports*Total
Exports Total Imports
$10,000
$20,000
__________________________
Total Gross Domestic Product =
_______________________________4000240050003003009000250000400000300000-10000$961,000Excluded
from GDP Intermediate products - inputs used to produce final goods
and services; excludes double countingThe tires that come with the
car are not counted as a final goodHowever if you get a flat and
buy the same tire it is counted as a final good
Excluded from GDPSecond-hand sales - refer to the sales of used
goods.
Excluded from GDP Nonmarket Transactions/Underground Economy
transactions that do not take place in the legal marketplace (i.e.
fixing your car, mowing your lawn, babysitting, etc.)
Excluded Products from GDPBlack Market illegal activities,
gambling, drugs, prostitution, smuggling, etc.
Excluded from GDPTransfer Payments redistribution of money from
one group to another, i.e. Social security, welfare, unemployment
checksPurchase Stocks and bonds
IncludedExcludedGDP Google
http://www.google.com/publicdata/explore?ds=d5bncppjof8f9_&ctype=l&met_y=ny_gdp_mktp_cd
GDP Classroom Simulation
GDP
Videohttp://www.youtube.com/watch?v=9m7BzvrPpgY&list=PL8B6092460F418F35&index=24
Indicate the components of GDP that each of the following
transactions falls underComponent of GDP or Excluded componentA
family buys a new refrigerator.Ford opens a new plant in Detroit,
Michigan.Glynn County builds a new middle school.China imports
commodities from the United States.A garage sale in your
neighborhood.The tires, bolts, and engine for a new automobile.The
illegal sale of imitation purses.Mowing your lawn every other
Saturday and being paid an allowance.Checks sent to Social Security
recipients
Consumption
Investment
Government
Net Exports
Second-Hand Sale
Intermediate Products
Underground Economy (Black Market)
Non-Market Transaction
Transfer Payment (Cash Transfer)GDP Simulation YearPriceQuantity
SoldTotal GDPGDP Simulation YearPriceQuantity SoldTotal
GDP115522510321020Nominal Versus Real GDPYear 1 Nominal GDPYear 2
Nominal GDPYear 2 Real GDPSuppose an economys entire output is cars
and trucks.This year the economy produces:10 cars at $15,000 each
=+ 10 trucks at $20,000 each = Total =Nominal GDP GDP measured in
name only (current prices), not adjusted for inflation.Real GDP GDP
expressed in fixed (unchanging prices), adjusted for inflation.
Nominal Versus Real GDPYear 1 Nominal GDPYear 2 Nominal GDPYear
2 Real GDPSuppose an economys entire output is cars and trucks.This
year the economy produces:10 cars at $15,000 each = $150,000+ 10
trucks at $20,000 each = $200,000
Total = $350,000Nominal GDP GDP measured in name only (current
prices), not adjusted for inflation.Real GDP GDP expressed in fixed
(unchanging prices), adjusted for inflation.
Nominal Versus Real GDPYear 1 Nominal GDPYear 2 Nominal GDPYear
2 Real GDPSuppose an economys entire output is cars and trucks.This
year the economy produces:10 cars at $15,000 each = $150,000+ 10
trucks at $20,000 each = $200,000
Total = $350,000In the second year, the economys output does not
increase, but the prices of cars and trucks do:10 cars at $16,000
each =+ 10 trucks at $21,000 each =Total =
Nominal GDP GDP measured in name only (current prices), not
adjusted for inflation.Real GDP GDP expressed in fixed (unchanging
prices), adjusted for inflation.
Nominal Versus Real GDPYear 1 Nominal GDPYear 2 Nominal GDPYear
2 Real GDPSuppose an economys entire output is cars and trucks.This
year the economy produces:10 cars at $15,000 each = $150,000+ 10
trucks at $20,000 each = $200,000
Total = $350,000In the second year, the economys output does not
increase, but the prices of cars and trucks do:10 cars at $16,000
each = $160,000+ 10 trucks at $21,000 each = $210,000
Total = $370,000Nominal GDP GDP measured in name only (current
prices), not adjusted for inflation.Real GDP GDP expressed in fixed
(unchanging prices), adjusted for inflation.
Nominal Versus Real GDPYear 1 Nominal GDPYear 2 Nominal GDPYear
2 Real GDPSuppose an economys entire output is cars and trucks.This
year the economy produces:10 cars at $15,000 each = $150,000+ 10
trucks at $20,000 each = $200,000
Total = $350,000In the second year, the economys output does not
increase, but the prices of cars and trucks do:10 cars at $16,000
each = $160,000+ 10 trucks at $21,000 each = $210,000
Total = $370,000To correct for an increase in prices, economists
establish a set of constant prices by choosing one year as a base
year. :10 cars at $15,000 each =+ 10 trucks at $20,000 each =Total
=
Nominal GDP GDP measured in name only (current prices), not
adjusted for inflation.Real GDP GDP expressed in fixed (unchanging
prices), adjusted for inflation.
Nominal Versus Real GDPYear 1 Nominal GDPYear 2 Nominal GDPYear
2 Real GDPSuppose an economys entire output is cars and trucks.This
year the economy produces:10 cars at $15,000 each = $150,000+ 10
trucks at $20,000 each = $200,000
Total = $350,000In the second year, the economys output does not
increase, but the prices of cars and trucks do:10 cars at $16,000
each = $160,000+ 10 trucks at $21,000 each = $210,000
Total = $370,000To correct for an increase in prices, economists
establish a set of constant prices by choosing one year as a base
year. :10 cars at $15,000 each = $150,000+ 10 trucks at $20,000
each = $200,000
Total = $350,000Nominal GDP GDP measured in name only (current
prices), not adjusted for inflation.Real GDP GDP expressed in fixed
(unchanging prices), adjusted for inflation.
GDP DeflatorYear 2 Nominal GDP $370,000Year 2 Real GDP -
$350,000
Calculate the increase in prices based on the GDP Deflator
formulaGDP deflator = Nominal GDP/Real GDP 100
_____________ 100 =
_____rise in inflation
370,000350,0001066%Inflation and Inflation Rate Inflation
inflation is a rise in the general level of prices of goods and
services in an economy over a period of time.Inflation Rate -
percentage change in some measure of the price level from one
period to the next.Inflation Rate = GDP Deflator in year 2 GDP
Deflator in year 1 GDP Deflator in year 1GDP Deflator an index that
converts output measured at current prices into constant-dollar
GDP.The GDP deflator shows inflation, how much a change in the base
year's GDP relies upon changes in the price level.
Nominal GDP Versus Real GDP (RGDP)$8$9$10$11 1990 1995 2000
2012Nominal GDP is the Price RGDP is the Pizza Pie (physical units
sold)
YearPriceUnits SoldNominal GDP Real GDP1990$8102012$1110Nominal
GDP Versus Real GDP (RGDP)$8$9$10$11 1990 1995 2000 2012Nominal GDP
is the Price RGDP is the Pizza Pie (physical units sold)
YearPriceUnits SoldNominal GDP Real
GDP1990$810$80$802012$1110$110$80Nominal vs. Real GDP Practice
Problem2009 Price2009 Quantity2009 totals2010 Price2010
Quantity2010 totals (nom.)2010 totals (real)Food
$26$38Clothes$65$1010Entertainment$42$55Nominal GDPReal
GDP20092010GDP Deflator20092010
Economic Growth
Per Capita GDPReal GDP per capita real GDP divided by the total
population Considered the best measure of a nations standard of
living. Per Capita for each person
GDP and Quality of LifeNations with higher per capita GDP enjoy
higher quality of life, such as:Better NutritionComfortable
housingLonger life spansBetter education
Infrastructure/Telecommunications (roads, bridges, cable, internet,
phone lines, etc.)
Review Components of GDPIndicate the components of GDP that each
of the following transactions falls under. A family buys a new
refrigerator.Ford opens a new plant in Detroit, Michigan.Glynn
County builds a new middle school.China imports commodities from
the United States.What exclusionary components are affected by the
following transactions?A garage sale in your neighborhood.The
tires, bolts, and engine for a new automobile.The illegal sale of
imitation purses.Mowing your lawn every other Saturday and being
paid an allowance.
Calculating GDPCalculate the GDP deflator using the following
figures: Real GDP 2008 ($13.7 trillion)Nominal GDP 2008 ($14.6
trillion) using the following formula: Nominal GDP X 100 = Real
GDP
__14.6 = _______X 100 = _____ 13.71.065 106.5PRODUCTION AND
PRICESYEAR 1YEAR
2GOODSOUTPUTPRICESOUTPUTPRICESAPRICOTS10$5010$55BROCCOLI10$2512$25CARROTS10$259$302.
Calculate the nominal GDP for year 2, then calculate the GDP
deflator for year 2 using year 1 as a base year.
Year 2 Real GDP:Apricots - $500Broccoli - $300Carrots -
$225Total GDP - $1025 __1120 = _______X 100 = _____ 10251.09 109 =
9% inflationNominal GDP X 100 = Real GDPYear 2Nominal:Apricots -
$550Broccoli - $300Carrots - $270Total GDP - $1120Business Cycle
economy-wide fluctuations in a market or economy over several
months or years.
Business Cycles
ContractionRecovery
49
Expansion period of economic growth as measured by GDPLow
Unemployment
Business Cycles
Contraction
51Peak When real GDP stops rising; highest point in the business
cycle
Business Cycles
Contraction52Contraction economic decline marked by falling real
GDPRise in unemployment
Business Cycles
Contraction
53Trough bottomed out, economy reaches its lowest point, real
GDP stops falling
Business Cycles
Contraction54Recovery - A return to a normal state of the
economy, where the economy begins to show signs of health "signs of
recovery in the housing market.
Business Cycles
Contraction55RecessionRecession is a prolonged economic
contractionReal GDP falls for two consecutive quarters (6 straight
months)Rise in unemployment, falling profits, bankruptcies,
foreclosures, etc.
GDP
DepressionA long and severe recession (8 quarters of declining
real GDP)Severely high unemployment and low output
GDPPrices and QuantitiesYearPrice of Hot DogsQuantity of Hot
DogsPrice of HamburgersQuantity of
Hamburgers200520062007$1$2$3100150200$2$3$450100150Calculating
Nominal GDP200520062007________ per hot dog ________ hot dogs =
____________ per hot dog ________ hot dogs = ____________ per hot
dog ________ hot dogs = _________ per hamburger ____ hamburger =
_________ per hamburger ____ hamburger = _________ per hamburger
____ hamburger = ____200520062007Total Market Value for Hot Dogs
_______ + Total Market Value for Hamburgers _______ =
__________Total Market Value for Hot Dogs _______ + Total Market
Value for Hamburgers _______ = __________Total Market Value for Hot
Dogs _______ + Total Market Value for Hamburgers _______ =
__________Calculating Real GDP (base year 2005)200520062007______
per hot dog ______ hot dogs = _____________ per hot dog _______ hot
dogs = ____________ per hot dog _______ hot dogs = ____________ per
hamburger ______ hamburger = __________ per hamburger _____
hamburger = __________ per hamburger _____ hamburger =
____200520062007Total Market Value for Hot Dogs __________ + Total
Market Value for Hamburgers __________ = __________Total Market
Value for Hot Dogs __________ + Total Market Value for Hamburgers
__________ = ___________Total Market Value for Hot Dogs __________
+ Total Market Value for Hamburgers __________ =
__________Calculate the increase in prices based on the GDP
Deflator formulaGDP deflator = Nominal GDP 100 Real
GDP200520062007____________/____________ 100 = _____________
____________/____________ 100 =
_________________________/____________ 100 = _____________GDPPrices
and QuantitiesYearPrice of Hot DogsQuantity of Hot DogsPrice of
HamburgersQuantity of
Hamburgers200520062007$1$2$3100150200$2$3$450100150Calculating
Nominal GDP200520062007___1_____ per hot dog __100______ hot dogs =
__100_____2_____ per hot dog __150______ hot dogs =
__300_____3_____ per hot dog __200______ hot dogs = __600____2___
per hamburger __50__ hamburger = __100____3___ per hamburger
__100__ hamburger = __300____4___ per hamburger __150__ hamburger =
__600__200520062007Total Market Value for Hot Dogs _______ + Total
Market Value for Hamburgers _______ = __________Total Market Value
for Hot Dogs _______ + Total Market Value for Hamburgers _______ =
__________Total Market Value for Hot Dogs _______ + Total Market
Value for Hamburgers _______ = __________Calculating Real GDP (base
year 2005)200520062007______ per hot dog ______ hot dogs =
_____________ per hot dog _______ hot dogs = ____________ per hot
dog _______ hot dogs = ____________ per hamburger ______ hamburger
= __________ per hamburger _____ hamburger = __________ per
hamburger _____ hamburger = ____200520062007Total Market Value for
Hot Dogs __________ + Total Market Value for Hamburgers __________
= __________Total Market Value for Hot Dogs __________ + Total
Market Value for Hamburgers __________ = ___________Total Market
Value for Hot Dogs __________ + Total Market Value for Hamburgers
__________ = __________Calculate the increase in prices based on
the GDP Deflator formulaGDP deflator = Nominal GDP 100 Real
GDP200520062007____________/____________ 100 = _____________
____________/____________ 100 =
_________________________/____________ 100 = _____________GDPPrices
and QuantitiesYearPrice of Hot DogsQuantity of Hot DogsPrice of
HamburgersQuantity of
Hamburgers200520062007$1$2$3100150200$2$3$450100150Calculating
Nominal GDP200520062007___1_____ per hot dog __100______ hot dogs =
__100_____2_____ per hot dog __150______ hot dogs =
__300_____3_____ per hot dog __200______ hot dogs = __600____2___
per hamburger __50__ hamburger = __100____3___ per hamburger
__100__ hamburger = __300____4___ per hamburger __150__ hamburger =
__600__200520062007Total Market Value for Hot Dogs ___100____ +
Total Market Value for Hamburgers ___100____ = ____200______Total
Market Value for Hot Dogs ___300____ + Total Market Value for
Hamburgers ___300____ = ____600______Total Market Value for Hot
Dogs ___600____ + Total Market Value for Hamburgers ___600____ =
____1200______Calculating Real GDP (base year
2005)200520062007______ per hot dog ______ hot dogs = _____________
per hot dog _______ hot dogs = ____________ per hot dog _______ hot
dogs = ____________ per hamburger ______ hamburger = __________ per
hamburger _____ hamburger = __________ per hamburger _____
hamburger = ____200520062007Total Market Value for Hot Dogs
__________ + Total Market Value for Hamburgers __________ =
__________Total Market Value for Hot Dogs __________ + Total Market
Value for Hamburgers __________ = ___________Total Market Value for
Hot Dogs __________ + Total Market Value for Hamburgers __________
= __________Calculate the increase in prices based on the GDP
Deflator formulaGDP deflator = Nominal GDP 100 Real
GDP200520062007____________/____________ 100 = _____________
____________/____________ 100 =
_________________________/____________ 100 = _____________GDP
Prices and QuantitiesYearPrice of Hot DogsQuantity of Hot DogsPrice
of HamburgersQuantity of
Hamburgers200520062007$1$2$3100150200$2$3$450100150Calculating
Nominal GDP200520062007___1_____ per hot dog __100______ hot dogs =
__100_____2_____ per hot dog __150______ hot dogs =
__300_____3_____ per hot dog __200______ hot dogs = __600____2___
per hamburger __50__ hamburger = __100____3___ per hamburger
__100__ hamburger = __300____4___ per hamburger __150__ hamburger =
__600__200520062007Total Market Value for Hot Dogs ___100____ +
Total Market Value for Hamburgers ___100____ = ____200______Total
Market Value for Hot Dogs ___300____ + Total Market Value for
Hamburgers ___300____ = ____600______Total Market Value for Hot
Dogs ___600____ + Total Market Value for Hamburgers ___600____ =
____1200______Calculating Real GDP (base year
2005)200520062007___1___ per hot dog ___100___ hot dogs =
___100_______1___ per hot dog ___150____ hot dogs =
__150_______1___ per hot dog ___200____ hot dogs = __200______2____
per hamburger ___50___ hamburger = _100_____2____ per hamburger
___100__ hamburger = _200_____2____ per hamburger ___150__
hamburger = _300___200520062007Total Market Value for Hot Dogs
__________ + Total Market Value for Hamburgers __________ =
__________Total Market Value for Hot Dogs __________ + Total Market
Value for Hamburgers __________ = ___________Total Market Value for
Hot Dogs __________ + Total Market Value for Hamburgers __________
= __________Calculate the increase in prices based on the GDP
Deflator formulaGDP deflator = Nominal GDP 100 Real
GDP200520062007____________/____________ 100 = _____________
____________/____________ 100 =
_________________________/____________ 100 = _____________GDPPrices
and QuantitiesYearPrice of Hot DogsQuantity of Hot DogsPrice of
HamburgersQuantity of
Hamburgers200520062007$1$2$3100150200$2$3$450100150Calculating
Nominal GDP200520062007___1_____ per hot dog __100______ hot dogs =
__100_____2_____ per hot dog __150______ hot dogs =
__300_____3_____ per hot dog __200______ hot dogs = __600____2___
per hamburger __50__ hamburger = __100____3___ per hamburger
__100__ hamburger = __300____4___ per hamburger __150__ hamburger =
__600__200520062007Total Market Value for Hot Dogs ___100____ +
Total Market Value for Hamburgers ___100____ = ____200______Total
Market Value for Hot Dogs ___300____ + Total Market Value for
Hamburgers ___300____ = ____600______Total Market Value for Hot
Dogs ___600____ + Total Market Value for Hamburgers ___600____ =
____1200______Calculating Real GDP (base year
2005)200520062007___1___ per hot dog ___100___ hot dogs =
___100_______1___ per hot dog ___150____ hot dogs =
__150_______1___ per hot dog ___200____ hot dogs = __200______2____
per hamburger ___50___ hamburger = _100_____2____ per hamburger
___100__ hamburger = _200_____2____ per hamburger ___150__
hamburger = _300___200520062007Total Market Value for Hot Dogs
___100_______ + Total Market Value for Hamburgers ___100_______ =
____200_______Total Market Value for Hot Dogs ___150_______ + Total
Market Value for Hamburgers ___200_______ = ____350_______Total
Market Value for Hot Dogs ___200_______ + Total Market Value for
Hamburgers ___300_______ = ____500_______Calculate the increase in
prices based on the GDP Deflator formulaGDP deflator = Nominal GDP
100 Real GDP200520062007____________/____________ 100 =
_____________ ____________/____________ 100 =
_________________________/____________ 100 = _____________GDP
Prices and QuantitiesYearPrice of Hot DogsQuantity of Hot DogsPrice
of HamburgersQuantity of
Hamburgers200520062007$1$2$3100150200$2$3$450100150Calculating
Nominal GDP200520062007___1_____ per hot dog __100______ hot dogs =
__100_____2_____ per hot dog __150______ hot dogs =
__300_____3_____ per hot dog __200______ hot dogs = __600____2___
per hamburger __50__ hamburger = __100____3___ per hamburger
__100__ hamburger = __300____4___ per hamburger __150__ hamburger =
__600__200520062007Total Market Value for Hot Dogs ___100____ +
Total Market Value for Hamburgers ___100____ = ____200______Total
Market Value for Hot Dogs ___300____ + Total Market Value for
Hamburgers ___300____ = ____600______Total Market Value for Hot
Dogs ___600____ + Total Market Value for Hamburgers ___600____ =
____1200______Calculating Real GDP (base year
2005)200520062007___1___ per hot dog ___100___ hot dogs =
___100_______1___ per hot dog ___150____ hot dogs =
__150_______1___ per hot dog ___200____ hot dogs = __200______2____
per hamburger ___50___ hamburger = _100_____2____ per hamburger
___100__ hamburger = _200_____2____ per hamburger ___150__
hamburger = _300___200520062007Total Market Value for Hot Dogs
___100_______ + Total Market Value for Hamburgers ___100_______ =
____200_______Total Market Value for Hot Dogs ___150_______ + Total
Market Value for Hamburgers ___200_______ = ____350_______Total
Market Value for Hot Dogs ___200_______ + Total Market Value for
Hamburgers ___300_______ = ____500_______Calculate the increase in
prices based on the GDP Deflator formulaGDP deflator = Nominal GDP
100 Real GDP200520062007___200_________/____200________ 100 =
____100_________ or ____NA______ %___600_________/____350________
100 = ___171__________ or ______71_____
%____1200________/___500_________ 100 = ___240__________ or
_______140_____%Application - Calculating GDP ProductQuantity Price
(per 1 unit)Dollar Value ConsumptionAutomobilesReplacement
TiresShoes
61055$20000$60$50_____________________________________________________________________________________________InvestmentMachineryComputers
Cell
Phones103045$8000$1500$200__________________________________________________________________________________GovernmentSingle
FamilyMultifamilyCommercial351$75,000$300,000$1,000,000___________________________________________________________________________Net
Exports*Figure this amount by taking Exports minus Imports*Total
Exports $10,000Total Imports$20,000___________ -
__________=___________
_________________________
Total Gross Domestic Product =
_______________________________Application - Calculating GDP
ProductQuantity Price (per 1 unit)Dollar Value
ConsumptionAutomobilesReplacement TiresShoes
61055$20000$60$50_________120,000_________________________600______________________2,750__________________InvestmentMachineryComputers
Cell
Phones103045$8000$1500$200_________80,000___________________________45,000__________________________9,000_________________GovernmentSingle
FamilyMultifamilyCommercial351$75,000$300,000$1,000,000_________225,000_________________________1,500,000________________________1,000,000_______________Net
Exports*Figure this amount by taking Exports minus Imports*Total
Exports $10,000Total Imports$20,000___________ -
__________=___________
_________-10,000________________
Total Gross Domestic Product =
_________2,972,350______________________Prices and
QuantitiesYearPrice of MilkQuantity of MilkPrice of HoneyQuantity
of Honey200520062007$1$1$2 100200200$2$2$450100100 Calculating
Nominal GDP200520062007___1_____ per milk ___100_____ milk =
__100________1_____ per milk ___200_____ milk = __200________2_____
per milk ___200_____ milk = __400_______2____ per honey ___50____
honey =___100_______2____ per honey ___100____ honey
=__200________4____ per honey ___100____ honey
=__400______200520062007Total Market Value for Milk ___100_______ +
Total Market Value for Honey ___100_______ = ____200________Total
Market Value for Milk ___200_______ + Total Market Value for Honey
___200_______ = ____400________Total Market Value for Milk
___400_______ + Total Market Value for Honey ___400_______ =
____800________Calculating Real GDP (base year
2005)200520062007___1_____ per milk __100______ milk =
__100________1_____ per milk __200______ milk = __200________1_____
per milk __200______ milk = __200________2____ per honey ___50____
honey =__100_________2____ per honey ___100____ honey
=__200_________2____ per honey ___100____ honey
=__200______200520062007Total Market Value for Milk ___100_______ +
Total Market Value for Honey ___100_______ = ____200_________Total
Market Value for Milk ___200_______ + Total Market Value for Honey
___200_______ = ____400_________Total Market Value for Milk
___200_______ + Total Market Value for Honey ___200_______ =
____400_________GDP deflator = Nominal GDP/Real GDP 100
200520062007____200________/____200________ 100 = _____100________
or ____N/A________ % increase_____400_______/____400________ 100 =
____100_________ or ___0_________ %
increase___800_________/___400_________ 100 = ___200__________ or
___100_________ % increaseStagflationStagnant and inflation, is a
decline in real GDP combined with a rise in price level
Extra CreditThe country of Terrorville produces two goods:
footballs and basketballs. The following is a table showing the
prices and quantities of output for three years.
Chapter 5 + 6Youtube Video - Episode 15 Elasticity of Demand
Youtube Video - Price Floors Ceilings Homework Article - Energy
Demand Chapter 5 + 6 Notes Mankiw Practice Review Ch. 6 Chapter 4 -
Elasticity of Demand, Determinants of Elasticity of Demand Free
Response Ch. 5 + 6 Chapter 6 - Price Floors and Ceilings Chapter
23YouTube Video - Episode 20 YouTube Video - Episode 21 YouTube
Video - Episode 22 Homework - The Underground Economy, pg. 520-521
Homework - Who Wins at the Olympics, pg. 524 Chapter 23 GDP
Practice Review All about GDP Gross Domestic Product Practice
Worksheet Daily Tens Chapter 23 Notes GDP Population WebQuest Free
Response - GDP Measuring the standard of living (Per Capita GDP
Wksht.)Terms Due TodayFormulasGDP Deflator = Nominal GDP/Real GDP X
100
Inflation Rate = GDP Deflator in year 2 GDP Deflator in year 1 x
100 GDP Deflator in year 1
Per Capita GDP = Total GDP/Population
a. One point is earned for calculating the nominal GDP for 2010
as $145 (= 20 + 100 + 25). One point is earned for calculating the
real GDP in 2010 as $100 (= 20 + 60 + 20). One point is earned for
calculating GDP deflator 145/100 x 100 = 145b. One point is earned
for calculating the inflation rate as 10 percent 55-50/50 x 100 =
10 percent
2008 Form BOne point is earned for calculating todays GDP = ($6
x 400) + ($2 x 1,000) + ($2 x 800) = $6,000. One point is earned
for stating that the inflation rate is 50 percent [(150-100)/100].
One point is earned for calculating this years real GDP =
$6,000/1.5 = $4,000
Not included second hand saleIncluded new service provided in
2006Included commissions are a new serviceNot included production
outside the U.S. is not included2007 AP Macro
2011 Free Response
2008 Free Response
2007 Free Response
Mankiw Practice Ch. 23
ConsumptionNo, because that transaction is a purchase of an
asset, not a purchase of currently produced capital goods.It means
that imports exceed exports.Mankiw Practice Ch. 23100, 200, 400100,
100, 100
Mankiw Practice Ch. 23700700770720100107107 100/100 = .07 or
7%Price Change, percentage change in GDP was 10%, 7% was due to
price change.
Mankiw Practice Ch. 23Year 1, because the deflator = 100.Prices
rose 20 percent and real output stayed the same.Prices stayed the
same and real output rose 25 percent.
Binder Check (Due Today)Mankiw Practice ReviewFree Response
QuestionsNominal and Real GDP Practice ActivityDaily TensNotes (Ch.
23)Terms (if not exempt)All about GDP
Formulas Chapter 23GDP Deflator = Nominal GDP/Real GDP X100
Inflation Rate = GDP Deflator in year 2 GDP Deflator in year 1 x
100 GDP Deflator in year 1
Per Capita GDP = Total GDP/Population
