The Main Idea Throughout the years, the U.S. economic system has changed. Each change affected what was produced and how people were employed. To gauge.

The Main Idea

Throughout the years, the U.S. economic system has changed. Each change affected what was produced and how people were employed. To gauge the health of our economic system, we use a variety of economic indicators.

Key Concepts

The Changing U.S. Economy

Measuring Economic Activity

Who has fat stacks?

Who thinks they have the most money on them right now?

Who is the tallest in here?

Who has the highest GPA?

Measuring Economic Activity

Economic indicators measure things such as:

how much a country is producing

whether the economy is growing

how the economy compares to other countries

The Changing U.S. Economy

Sometimes major shifts in certain growth areas can change the emphasis of the U.S. economy.

The United States has experienced four major economic shifts.

Graphic Organizer

1600s 1700s 1850s 1900s Present

Bartering and tradingcreated our

service-based economy

Farming created our agriculture-based economy

The Industrial Revolution started

the industry-based economy

The invention of computers created the information-

based economy

We live in the information age,

but still rely upon the other types of

economies

Gross Domestic Product

gross domestic product (GDP)The total dollar value of all final goods and services produced in a country during one year.

Measuring gross domestic product (GDP), involves computing the sum of goods and services sold to businesses, consumers, the government, and other countries.

Components of GDP – what goes into it?

1. Consumer spending for food, clothing, housing and other spending.

2. Business spending for buildings, equipment, and inventory items

3. Government spending to pay employees and to buy supplies and other goods and services

Components of GDP (cont’d)

4. The exports of a country less (MINUS) the imports into the country

Ex: Exports – Imports = the money you can count towards your GDP

USDebtClock

Categories of GDP spending

Consumer Spending

Business

Gov't

Exports

What counts towards GDP?

You are out mowing your lawn. What counts towards GDP?

GDP doesn’t include value of work you do for yourself. BUT included in GDP is everything you bought to cut your lawn.

What doesn’t count towards GDP?

Only final goods are counted when you measure GDP

Ex: Only a finished car is measured in GDP, everything that went into that car wasn’t counted – ex - the steel and fabric

Intermediate goods would be counted twice (Steel and fabric)

That’s not cool…

China overtakes US economy

GDP per capita

Another way to measure economic growth is GDP per capita.

Calculated by:

GDP÷ total population.

GDP per capitaOutput per person

Group ActivityGet a partnerIn presentation software, create a presentation about the countries given to you and include:-Title slide-Country-Flag-Map of where country is Population-GDP-GDP per capita -unemployment rate-personal income level (if available)

% changes for:-Population-GDP-GDP per capita2010 vs 2013/2014-Works cited page in MLA format

GDP per capita

Reminder:

Calculated by-

GDP÷ total population.

USDebtClock

*140+/- million people work in the US

Labor force consists of all people over age 16 who are actively working or are seeking work

Unemployment rate is the portion of people in the labor force who aren’t working.

Employment

Labor force – I don’t get it

Labor Force

Unemployed

Not part

of the Labor force

Students, retired people, people who can’t work or don’t want to

Employment

People are “unemployed” if:

1.They are looking for work

2.Willing/able to work

3.But can’t find a job

Unemployment rateThe portion of people in the labor force who are not working

Employment

The unemployment rate measures the number of people who are able and willing to work but cannot find work during a given period.

Unfortunately, not everyone is able/willing to work

Students, retired people, and others who cannot or do not wish to work are NOT part of the labor force!!!

Types of Unemployment – don’t need to write these down

Frictional – caused by changing jobs; little effect on the economy

Seasonal – workers are needed only part of the year

Types of Unemployment (Contd)

Structural – new technology replaces workers, requiring new skills or companies merge and eliminate jobs

Cyclical – the entire economy slows down

Try finding our current unemployment rate

Productivity1890’s average worker put in about 60 hours of work in a week

Now we work around 40 hours a week but we produce WAY more goods and services….how is this?

– Technology

– Management techniques

– Better worker training

Productivity

A vital source of economic growth is an increase in output per worker.

productivityThe production output in relation to a unit of input

(how many cans of chicken noodle soup can be produced with the number of staff working at the time)

Personal Income

Personal income funds provide the foundation for buying needed goods and services.

Personal incomeSalaries and wages as well as investment income and gov’t payments to individuals.

Retail Sales

On a monthly basis, the U.S. Dept of Commerce measures retail sales by consumers.

Increasing retail sales usually points towards economic growth

Retail salesSales of durable and nondurable goods bought by consumers

Retail Sales

Main items measure for estimating retail sales include: automobiles, building materials, furniture, gasoline, clothing as well as purchases from restaurants, dept. stores, and food and drug stores

Retail SalesDurable and nondurable? What does that mean?

Durable –

– a consumer good that typically lasts longer than three years

– Furniture, jewelry, cars, appliances

Nondurable –

– a consumer good that typically lasts less than three years

– Food, cosmetics, medicines, clothes, shoes, small electronics

Partner Activity

On paper or electronically, list all the consumer goods and services you used from yesterday morning until you went to bed

Count them up when finished

Categories of GDP spending

Consumer Spending

Business

Gov't

Exports

You are a purchasing agent for a large furniture manufacturer. You have received several bids from lumber companies for a supply of teak, a very dense and decay-resistant type of wood. The lowest bid comes from a lumber company that has been known to abuse the environment.

Decision Making How does the lumber company’s reputation affect your decision? Explain your answer.

Answer

Students might suggest that all aspects of the company’s reputation should be considered before making a decision to buy from the company.

1. What do economic indicators measure?

Economic indicators measure the economic health of the nation.

2. How do we find GDP per capita?

GDP ÷ by total population of a country

3. What are the main sources of personal income?

Wages, salaries, investment income, and gov’t payments.