The Macreconomy : Business Cycle and GDP

American Government and EconomicsMr. 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…

1. Expansion – period of economic growth- People have jobs, consumers are spending

money2. 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

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 Trillion14,140,000,000,000

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!

Black Market- buying/selling of goods/services illegally – not paying taxes to the government for the purchase of the good/service

- ex. – bootleg moviesNon-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 dinner5. Mr. Miller paying a student to baby-sit his five kids

while he takes his girlfriends to the movies6. Buying clothes from Ebay.7. Buying bootleg movies from “Charlie” ‘round the way.8. Selling home-grown vegetables to your neighbor Buying organically grown vegetables from the grocery

store 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. Business Cycle Article/Questions2. List 3 Original examples of Final goods3. List 3 Original examples of Intermediate

goods4. Describe 2 original situations where the

good/service described WOULD be counted in this year’s GDP.

5. Describe 2 original situations where the good/service described WOULD NOT be counted in this year’s GDP.