BellRinger 3/23/2009

1. What do you think is the richest country in the

world today?
2. How do you think economists should measure
a countrys wealth?

We will take some notes today

Finished with Microeconomics

Microeconomics study
of individuals and the
economy

Macroeconomics study
of large organizations and
countries and the
economy
Finance study of
investment and credit

Gross Domestic Product

A measure of a countrys economy

GDP
All consumer spending
within a country in a
certain year, month or
quarter

GDP
All private investment
within a country in a
certain year, month or
quarter
IOW: (saving)

GDP
All net exports from a
country in a certain year,
month or quarter

Exports = goods shipped

to other countries
Imports = goods brought
into a country from
another country

GDP
All government
spending in a
country in a certain
year, month or
quarter
Examples:
education, military,
welfare, social
security, roads,
healthcare, etc

GDP
What economic activity did I leave out?

2 ways GDP might be misleading?

GDP per capita

Population measuring:
Divide GDP by population

GDP per capita $s

GDP per capita $s

Luxembourg

57 704

EU (established
15 countries)

28 741

United States

39 732

Germany

28 605

Norway

38 765

Italy

27 699

Ireland

35 767

Spain

25 582

Switzerland

33 678

Korea

20 907

United Kingdom

31 436

Czech Republic

18 467

Canada

31 395

Hungary

15 946

Australia

31 231

Slovak Republic

14 309

Sweden

30 361

Poland

12 647

Japan

29 664

Mexico

10 059

France

29 554

Turkey

7 687

Source: OECD World Economic Factbook, 2006 edition

GDP Calculation
Y=C+I+E+G
where
Y = GDP
C = Consumer Spending
I = Investment
E = Exports - Imports
G = Government Spending

United States GDP 2003

Y=C+I+E+G
$$ in Billions
Consumer Spending = $7605
Investment = $1606
Exports = $1021
Imports = $1508
Government Spending = $2017
$7605 + 1606 + (1021-1508) + 2017 = $10,741 (2003)

Netherlands GDP 2003

Y=C+I+E+G
$$ in Billions
Consumer Spending = $400
Investment = $104
Exports = $339
Imports = $305
Government Spending = $131

16 million Dutch citizens

Calculate
the GDP
Netherlands
$400 +3.104
+ (339-305)
+ 131for= the
$669
(2003)
4. Calculate the GDP/capita
Per capita: 669,000,000,000/16,000,000 = $41,812.50
5. How can GDP be a limited measurement?