1. Tonya Blevins ECO2072 Summer 2011

2.  Slide 1: Title  Slide 2: Index  Slide 3: Introduction  Slide 4: Consumption  Slide 5: Investments  Slide 6: Government purchases  Slide 7: Net Exports  Slide 8:How GDP relates to economics  Slide 9: Conclusion

3.  GDP measures market value of goods/services  GDP also measures income/expenditures  GDP is broken into four components: ◦ Consumption ◦ Investment ◦ Government Purchases ◦ Net Exports  Y=C+I+G+NX

4.  Spending by households on goods/services.  Can be durable or non-durable  Durable includes: appliances and automobiles  Non-Durables includes: food and clothing  Consumption excludes purchases of new housing  Intangible services include: medical care

5.  The purchase of goods for future use.  The sum of equipment, inventories, and structures.  Includes the purchasing of new housing

6.  Spending on goods/services by federal, local, and state government.  Includes the following: ◦ Salaries of government workers ◦ Expenditures on public works

7.  Domestically produced goods by foreigners (exports).  Foreign goods by domestic residents (imports)

8.  Y=C+I+G+NX calculates growth of the economy in the United States  From 1965-2010 GDP increased 3% per year.  Periods of declination = recession (figure 2, pg 503)  Recession = unemployment & bankruptcy  Higher GDP = better way of life

9.  GDP measures goods/services produced in the nation.  Goods/services measured during given time period.  Also measure Total income/Total Expenditures  Four Components:  Y=C+I+G+NX  Higher GDP = better way of life