 There is a rare brain disorder that causes people to involuntarily speak in foreign accents  Saudi Arabia is the largest country in the world without a river  The highest paid athlete of all time is actually an Ancient Roman charioteer named Gaius Appuleius Diocles who earned the equivalent of $15 billion before retirement  Jeans have been banned in North Korea for years because they are considered a symbol of U.S. imperialism

Unit VI: Macroeconomics Lesson 1

 The Circular Flow is the continuous movement of production, income, and services of scarce resources that flow between producers and consumers  In particular, the Circular Flow is a model of the continuous production and consumption interaction among the four major sectors of the macro-economy: household, business, government, and foreign  Using the three macroeconomic markets- product, resource, and financial

 Households: Includes everyone that undertakes consumption expenditures  Business Sector: Includes the institutions that undertake the production of goods and services  Government sector: Includes the ruling bodies of the federal, state, and local governments  Foreign sector: Includes everyone and everything (households, businesses, and governments) beyond the domestic economy

 Product Markets: The exchange of final goods and services  Resource Markets: The exchange of land, labor, and capital  Financial Markets: The exchange between those looking to save income and those looking to borrow income

 Leakages are income that is not directly spent in the circular flow  Types of leakages include:  Taxes paid to the government  Savings  Spending on imports

 Injections are additions to the circular flow of spending that are not directly dependent upon the level of income in the economy  Types of Injections include:  Investment spending  Government spending  Exports

 The circular flow in its entirety will show the relationship between the four main sectors at the macroeconomic level  When Total Output= Total Spending or when Leakages= Injections then the economy is at its functioning equilibrium  When total output does not equal total spending or the leakages and injections are unequal the economy will be in disequilibrium

 The planet's rotation is slowing down overall because of tidal forces between Earth and the moon. Roughly every 100 years, the day gets about 1.4 milliseconds, or 1.4 thousandths of a second, longer  Only one person in two billion will live to be 116 or older  Fictional/horror writer Stephen King sleeps with a nearby light on to calm his fear of the dark

 In order to track the U.S. economy, economists use a system called national income accounting  They study overall production, income, investment, and savings  The government collects and organizes these facts and uses these facts to make their policies and decisions

 Gross Domestic Product (GDP) is the most important measure of the economy  GDP is the dollar value of all final goods and services that are produced within a country’s borders within a given year

 Dollar Value: the total of the selling prices of all goods and services produced in a calendar year  This includes goods and services produced by individuals, businesses, and the government  Final goods and services: the final products that are sold to consumers  Intermediate goods- goods used in the production of other goods- are not counted, this avoids counting the values more than once

 Produced in a country: Only look at goods and services produced within a country itself- GDP is gross domestic product  Does not include a US car company producing goods in Japan, but would include a Japanese car company producing goods in Ohio  In a given year: Takes into account when the good was produced- not when it is resold  Car is counted in GDP when first sold, not when it is resold

 Gross Domestic Product is calculated by adding up the four categories  Consumption (C): the dollar value of all goods and services purchased by households  Investment (I): the dollar value of all goods and services purchased by businesses for the purpose of using in their business

 Government Spending (G): the dollar value of all goods and services purchased by the various agencies of the United States  Net Exports (X-M): Dollar value of all goods and services produced in the United States and shipped to other countries (exports) MINUS the value of the goods and services imported from other countries (imports)  Exports minus imports

 Expenditure approach: the values of the four groups of GDP are added up  GDP= C+I+G+(X-M)  Income approach: Calculates GDP by adding up all of the incomes in the economy  Both numbers should come out to be equal  Government economists usually do both to find misreported information to get an accurate number

 Intermediate goods  Used goods  Underground production (black markets)  Financial Transactions  Household production  Transfer payments  Under the table wages  Illegal incomes

 GDP per Capita: the currency value of all final goods and services produced within a country’s borders divided by the population  GDP per Person  This is used to show the standard of living in a country  Standard of living: intangible concept that seeks to represent a country’s level of economic prosperity  Correlates with GDP growth

 Does not measure social well-being  Does not measure non-monetary output or transactions  Does not show the distribution of wealth and therefore does not show inequality  In reality, GDP per Capita fails to show standard of living

 Nominal GDP is the currency value of all final goods and services produced within a country’s borders measured in today’s prices  Real GDP is the currency value of all final goods and services produced within a country’s borders minus the effects of inflation  Inflation: A general rise in the price level of an economy

 Aggregate supply (total supply in economy at all prices) and aggregate demand (total demand in an economy at all prices) are factors that make GDP go up and down  When there is an increase or decrease in aggregate supply or aggregate demand price levels (the average of all prices) will change  When prices change the amount of income, consumption, exports, imports, and government spending will all change- changing the GDP

 Economists use indicators other than GDP to measure the health of the economy  Many of the measures are found using GDP  Gross National Product (GNP): The annual income earned by US owned firms and people  Net National Product (NNP): GNP minus the depreciation (loss of value) of capital equipment  National Income (NI): Net National Product minus taxes  Personal Income (PI): National Income minus what a business reinvests in itself and a firm’s taxes plus other household income (i.e. Social Security)  Disposable Personal Income (DPI): Personal Income minus all required individual taxes