1. 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 country’s wealth? We will take some notes today

2. Microeconomics – study of individuals and the economy Macroeconomics – study of large organizations and countries and the economy Finance – study of investment and credit Finished with Microeconomics

3. Gross Domestic Product A measure of a country’s economy

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

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

6. 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

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

8. GDP What economic activity did I leave out? 2 ways GDP might be misleading?

9. GDP per capita Population measuring: –Divide GDP by population

10. GDP per capita $s Luxembourg57 704EU (established 15 countries) 28 741 United States39 732Germany28 605 Norway38 765Italy27 699 Ireland35 767Spain25 582 Switzerland33 678Korea20 907 United Kingdom31 436Czech Republic18 467 Canada31 395Hungary15 946 Australia31 231Slovak Republic14 309 Sweden30 361Poland12 647 Japan29 664Mexico10 059 France29 554Turkey7 687 Source: OECD World Economic Factbook, 2006 edition

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

13. 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)

14. Netherlands GDP 2003 Y = C + I + E + G $$ in Billions Consumer Spending = $400 Investment = $104 Exports = $339 Imports = $305 Government Spending = $131 $400 + 104 + (339-305) + 131 = $669 (2003) Per capita: 669,000,000,000/16,000,000 = $41,812.50 16 million Dutch citizens 3. Calculate the GDP for the Netherlands 4.Calculate the GDP/capita 5.How can GDP be a limited measurement?