1. NATIONAL DEBT AND GROSS DOMESTIC PRODUCT BUSINESS ECONOMICS

2. What you should learn today: Define recession Be able to express the entire GDP equation, and what each component stands for Identify a final good Identify an intermediate good Identify inflation

3. World Debt as of Nov 12, 2014

5. NOVEMBER 12, 2014

11. How U.S.Government Gets & Receives Money

12. Circular Flow of Money

16. EXPANSION AND CONTRACTION: THE BUSINESS CYCLE A recession is a recurring period of decline in  total output,  income,  employment,  trade, Usually lasting from six months to a year, and marked by widespread contractions in many sectors of the economy. Expansions can range in duration from several months to several years.

17. Double Dip Recession Recession + recovery + recession Slowdown in demand for goods & service Layoffs & spending cutbacks

18. THE U.S. RECESSIONS SINCE 1981

24. GROSS DOMESTIC PRODUCT The market value of all final goods & services produced within a country in a given period of time

25. GROSS DOMESTIC PRODUCT GDP = C + G + I + NX  C - Consumption  G – Government Spending  I – Investments  NX – Net Exports

26. Consumption - Durable goods Durable goods (jewelry, laptop, baseball glove) - Nondurable goods (food, gasoline, clothing) - Services (medical expenses, mechanic, landscaper)

27. Government Spending - Defense - Postal Service - Roads - Schools - Doesn’t include social security or unemployment benefits

28. Investments Residential Single-family homes Multi-family homes Rental Property Non-Residential Equipment (machines and tools) Business Plants Business Inventories

29. Net Exports Exports – Imports = NX Ship $128,000 worth of corn to Columbia Receive $115,000 worth of coffee beans from Columbia Net Exports?

30. Transfer Payments$54 Interest Income$150 Depreciation$36 Wages$67 Gross Private Investment $124 Business Profits$200 Indirect Business Taxes$74 Rental Income$75 Exports $118 Net Foreign Factor Income$12 Government Purchases $156 Household Consumption $304 Imports$95 GDP Gross Private Investment- $124 Government Purchases- $156 Household Consumption- $304 Exports- $118 Imports- $95 124+156+304+(118-95)=? GDP=$606

38. GROSS DOMESTIC PRODUCT Final Goods Intended for the end user Intermediate Goods Components of ingredients in the production of other goods Tangible goods DVDs, mountain bikes, soda Intangible goods Dry cleaning, concerts, cell phone service

39. Final Goods and Services  Manicures  Bread  Cruise missile  New factory  Dresses  Increase in automobile inventory Intermediate Goods  Window glass in new automobiles  Lumber in a new house  Screws used in a cruise missile  Flour for making bread  Cloth for making dresses FINAL V. INTERMEDIATE GOODS

40. GDP GOODS & SERVICES AT FINAL DESTINATION Who buys haircuts, bread & dresses? Who buys cruise missiles? Who buys a new factory or builds up an inventory of unsold products such as automobiles? Households, families, individuals GovernmentBusinesses

41. UNITED STATES GDP BY SECTOR

42. UNITED STATES TOP TRADING PARTNERS

43. ARUBA TRADING PARTNERS