Chapter 17 The American Economy

Lesson 1: Gross Domestic Product (Pages 466-470) Vocabulary (5) 1. Product 2. Gross Domestic Product (GDP) 3. Entrepreneur 4. per capita GDP 5. standard of living

-GDP is the total market value of all final products made in one year. -it is used to determine the economic output of a country

-land, soil, forests and mineral deposits -tools, buildings and money -workers and their skills -the willingness to take risks and start a business

-it includes final goods and services sold in the market -it does not include intermediate goods, which are used to make final goods. -used goods are also not included -GDP measures a country’s economy, but per capita GDP is the GDP divided by the population. -per capita GDP makes it easier to compare countries -the quality of life for the people in a country.

Lesson 2: Economic Flow and Economic Growth (Pages 471-476) Vocabulary (8) 1.circular flow model- 2. factor market- 3.product market- 4.economic growth- 5.productivity- 6.specialization- 7.division of labor- 8.human capital-

-economy grows  More goods are made -Economy shrinks Fewer goods are made -when an economy grows very slowly or shrinks. -companies may close and people may lose their jobs. -inflation means money is worth less. -prices go up. Goods become more expensive.

Lesson 3: Capitalism and Free Enterprise (Pages 477-481) Vocabulary (8) 1.capitalism- 2. free enterprise- 3. voluntary exchange- 4. profit- 5. profit motive- 6. competition- 7. private property rights- 8. laissez-faire economics-

-where factors of production are bought and sold -where businesses sell goods and services -all the people in the economy who buy goods and services -all the companies that produce goods and services

-an increase in the output of goods and services over time -how efficiently resources are used -Specialization usually increases productivity. -Businesses and people become experts

Capitalism is when private citizens own the factors of production Capitalism is when private citizens own the factors of production. People decide how to use the factors in order to make money. Free enterprise is when individuals and business compete for profit with little intervention from the government.