sponge: thursday, oct. 6 1. what are the three primary actors in an economy? 2. what are the factors...

Sponge: Thursday, Oct. 6

1. What are the three primary actors in an economy?

2. What are the factors necessary for pure or perfect competition?

Macroeconomics

Unit 3

SSEMA1 The student will illustrate the means by which economic activity is measured.

a. Explain that overall levels of income, employment, and prices are determined by the spending and production decisions of households, businesses, government, and net exports.

b. Define Gross Domestic Product (GDP), economic growth, unemployment, Consumer Price Index (CPI), inflation, stagflation, and aggregate supply and aggregate demand.

Macroeconomics

The branch of economics that deals with the economy as a whole, using aggregate measures of output, income, prices and employment.

Economists use economic indicators to gauge how well a national economy is doing

What is the strength of our national economy? Macroeconomics helps us answer that question.

Gross Domestic Product (GDP)

GDP is the most common measure of the economic output of different countries

Year-to-year GDP data is used to measure a country’s economic growth (or decline)

GDP

Dollar value of all final goods, services, and structures produced within a country’s borders during a 1-year period

GNP?GNP?

Included in GDP:

GDP = C+ I + G + (X-M)GDP = C+ I + G + (X-M)

Consumption (C), investment (I), government Consumption (C), investment (I), government spending (G), and net exports (X-M)spending (G), and net exports (X-M)

C = C = householdhousehold or consumer spending or consumer spending

I = I = businessbusiness investment spending on capital investment spending on capital investments, production processes, new investments, production processes, new employeesemployees

G = G = governmentgovernment spending on goods and spending on goods and servicesservices

X-M = exports - importsX-M = exports - imports

Not included in GDP:

secondhand sales (used car), intermediate products (like the flour that is

used to make a loaf of bread), non-market transactions (lawn service), and underground economy (gambling, garage

sales)

GDP

Per capita GDP: Measures amount of goods and services produced per person in a country

Real GDP: GDP that has been adjusted for price changes (inflation) Uses prices from a base year to compare

increases or decreases in GDP For example, if 2000 is our base year, then any

increases in GDP must be due to changes in the quantity column and not the price column

Sponge: Thursday, February 23

Saturday school this weekend!Get a whiteboard and pen

“Pure monopoly” should replace what letter in the above table?

Characteristics of Market Structures

Market Structure

Number of Firmsin Industry

Influence over Price

Entry intoMarket

P Few Some Difficult

Q One Extensive Almost Impossible

R Many None Easy

S Many Limited Easy

Homework: due Friday, Feb. 24

Current event: article should be on some measure of an economy’s health or growth (like GDP, unemployment rate, inflation); can be on U.S. or another country

Good source for economics explanations: “mjmfoodie” channel on You Tube; organized by macro, micro, etc.

My website with links for some good economics websites and most of our class PPTs: http://sbrownsocialstudies.weebly.com/

GDP-Review

Dollar value of all final goods, services, and structures produced within a country’s borders during a 1-year period

GNP?GNP?

Included in GDP:

GDP = C+ I + G + (X-M)GDP = C+ I + G + (X-M)

Consumption (C), investment (I), government Consumption (C), investment (I), government spending (G), and net exports (X-M)spending (G), and net exports (X-M)

C = C = householdhousehold or consumer spending or consumer spending

I = I = businessbusiness investment spending on capital investment spending on capital investments, production processes, new investments, production processes, new employeesemployees

G = G = governmentgovernment spending on goods and spending on goods and servicesservices

X-M = exports - importsX-M = exports - imports

Not included in GDP:

secondhand sales (used car), intermediate products (like the flour that is

used to make a loaf of bread), non-market transactions (lawn service), and underground economy (gambling, garage

sales)

Economic Growth

Economic growth: the ability of an economy to increase its total real output or real GDP

Comes from several sources:1. Improvements in education, experience and

skill level of the workforce (human capital)

2. Greater amounts of physical capital

3. Improved technology Real GDP per capita may be a better

indicator of economic growth than real GDP alone b/c it takes into account the population of a country

Consumer Price Index-Measure of Inflation

CPI- Statistical series that measures monthly CPI- Statistical series that measures monthly changes in the costs of goods and services by changes in the costs of goods and services by tracking a “market basket” of goods/services tracking a “market basket” of goods/services typically purchased by consumers (see p. 362)typically purchased by consumers (see p. 362)

Unemployment

UnemploymentUnemployment occurs when people wish to work occurs when people wish to work but cannot find jobs; therefore, someone is but cannot find jobs; therefore, someone is unemployed if they do not have a job and they are unemployed if they do not have a job and they are looking for one.looking for one.

The The unemployment rateunemployment rate is calculated as follows: is calculated as follows:

Number of unemployed persons (looking for jobs)Number of unemployed persons (looking for jobs)Civilian Labor ForceCivilian Labor Force

The civilian labor force is the sum of all people age The civilian labor force is the sum of all people age 16 and above who are either employed or actively 16 and above who are either employed or actively seeking employmentseeking employment Does not include military members, ppl in jail or Does not include military members, ppl in jail or

prison, or ppl in nursing homes or other institutionsprison, or ppl in nursing homes or other institutions

Unemployment, continued

Discouraged workers: Unemployed people who have given up looking for work and therefore are NOT counted as part of the labor force

Part-time workers are counted as fully employed

Unemployed? Think-Pair-Share:

Your retired grandfather? Stay-at-home mom? Burglar who lost his job when he was

convicted and put in jail? Your cousin serving in Iraq? Full-time college student? Person with a part-time job at Starbucks?

3 types of unemployment:

Structural, cyclical, and frictional unemploymentStructural, cyclical, and frictional unemployment

Structural Unemployment

Unemployment caused by a fundamental change in the economy such as:

- Outsourcing of jobs

-Technology taking

over

Cyclical Unemployment

Unemployment directly related to swings in Unemployment directly related to swings in business cyclebusiness cycle

What are some jobs we are losing in our What are some jobs we are losing in our economy right now?economy right now?

Structural Unemployment

Unemployment caused by a fundamental change in the economy such as:

- Outsourcing of jobs

-Technology taking

over

Frictional Unemployment

Occurs when workers are between jobsOccurs when workers are between jobs

Usually a short-term conditionUsually a short-term condition

Average American changes careers 3-5 timesAverage American changes careers 3-5 times

What kind of unemployment is this?

Georgia’s Unemployment Rate

What do you think Georgia’s current unemployment rate is? Do you think the state’s rate is higher or lower than the national rate? According to the Georgia Dept. of Labor

website: Georgia Unemployment Rate: 9.7% National Unemployment Rate: 8.5%

Georgia’s historic rates

Calculate the class unemployment

You will be assigned a role to play and you must follow that role in this simulation

Interview your classmates to see if they are (1) part of the labor force and (2) if their scenario applies to the unemployment rate

Calculate the unemployment rate for the class based on your interviews

Add this survey and calculation to your unit portfolio log; it will be a class-participation grade

Work Period: Wednesday, Feb. 23

1. Finish employment survey and calculate class unemployment rate *Add to unit portfolio log*

2. Review standard break-down sheet with group and fill in details for elements b, c and d to the extent we have covered the parts of those elements *Add to unit portfolio log*

3. Begin work on vocabulary *Add to unit portfolio log*

Sponge: Friday, February 24

1. What are the three kinds of unemployment?

2. Do price ceilings create surpluses or shortages? What do price floors create?

Saturday School tomorrow Add your class unemployment survey to

your unit portfolio log, plus add the notes that we took yesterday and Wednesday

Get a white board and marker Current events are due today

SSEMA1 The student will illustrate the means by which economic activity is measured. a. Explain that overall levels of income, employment, and prices

are determined by the spending and production decisions of households, businesses, government, and net exports.


c. Explain how economic growth, inflation, and unemployment are calculated.

d. Identify structural, cyclical, and frictional unemployment. e. Define the stages of the business cycle, include peak,

contraction, trough, recovery, expansion as well as recession and depression.

Consumer Price Index CPI- The Consumer Price Index is a measure of

inflation that tells how much the price of a representative bundle of goods and services purchased by consumers has increased.

CPI & Inflation

The Consumer Price Index is a measure of inflation that tells how much the price of a representative bundle of goods and services purchased by consumers has increased.

Percentage change of price index from one period to another is inflation.

A positive rate of inflation does not mean that every single price increases, nor that all prices increase by the same amount, nor that the price of some goods didn't fall.

It represents an average price increase for the goods and services in the economy.

Inflation

A rise in the general or A rise in the general or average price level of average price level of all goods and services all goods and services produced in an produced in an economyeconomy

Dollar loses its valueDollar loses its value When prices rise, you When prices rise, you

can buy less with your can buy less with your money than you could money than you could beforebefore

From www.economicnoise.com

Stagflation

1.1. Period of stagnant economic growth Period of stagnant economic growth combined with inflationcombined with inflation

2. A condition of slow economic growth and relatively high unemployment (i.e., a time of stagnation) accompanied by a rise in prices, (i.e., inflation).

Stagflation, continued

Stagflation occurs when the economy isn't growing but prices are, which is not a good situation for a country to be in. (Think stagnation + inflation)

Source: www.investopedia.com

Deflation

Decrease in the general price of goods and Decrease in the general price of goods and servicesservices

Sponge: Monday, February 27

What are three factors that could contribute to the growth in a nation’s economy (and therefore an increase in their real GDP)?

Business Cycles

The recurring and fluctuating levels of economic activity that an economy experiences over a long period of time. growth (expansion) peak recession (contraction) trough recovery

Recession

A decline in the rate of national economic activity, usually measured by a decline in real GDP for at least two consecutive quarters (i.e., six months)

Business Cycles

Since the World War II, most business cycles have lasted three to five years from peak to peak. Average duration of an expansion is 44.8

months Average duration of a recession is 11 months The Great Depression - which saw a decline in

economic activity from 1929 to 1933 - lasted 43 months.

Business Cycles: Characteristics and Causes

• Causes of business cycles

– Changes in capital expenditures

– Innovation and imitation

– Monetary policy decisions

– External shocks

Work Period: Monday, February 271. Create a 3-panel comic strip for each of the

types of unemployment OR as a group, create a short skit for each type of unemployment

*Add to unit portfolio log*

2. Review standard break-down sheet with group and fill in details for elements to the extent we have covered the material*Add to unit portfolio log*

3. Begin work on vocabulary *Add to unit portfolio log*

Sponge: Tuesday, February 28Write the questions (1-2) and the answers:

1. What are the five phases of a business cycle and what can cause a change in a cycle?

2. What happens when you spend more money than you make?

• Current event due this Friday should again be on a macro-economics topic and should reference your tree map created during the work period today

SSEMA1 The student will illustrate the means by which economic activity is measured. a. Explain that overall levels of income, employment, and prices

are determined by the spending and production decisions of households, businesses, government, and net exports.


c. Explain how economic growth, inflation, and unemployment are calculated.

d. Identify structural, cyclical, and frictional unemployment. e. Define the stages of the business cycle, include peak,

contraction, trough, recovery, expansion as well as recession and depression.

Deficit versus Debt

• Things to keep in mind:• Even when there is a budget surplus, there will

still be a national debt• One way to think about the debt is as

accumulated deficits• The Federal Government borrows money by

selling Treasury securities like T-bills, notes, Treasury Inflation-Protected securities and savings bonds to the public

• To reduce its debt, gov’t would have to have a surplus at the end of a given year and use that surplus to pay down its debt

Deficit versus Debt

• Brandi's disposable income for December is $2,000 and she spends $3,000 on holiday gifts. • Where do her finances stand at the end of the month?

• How will she finance her deficit? • So Brandi now owes the credit card company $1,000. • In January if Brandi still has a disposable income of

$2,000 and spends $2,000, she has a balanced budget for that month. • Does she still have debt?

• How can Brandi reduce or eliminate her debt?

Work Period: Tuesday, Feb. 28

1. Finish unemployment cartoons and skits (15 min); these are due TODAY

2. Create a tree map of key economic indicators: Real GDP, Inflation Rate (CPI), and Unemployment Rate

a. Sub-categories under each should include (1) what each indicator measures, (2) how it is calculated, (3) what an increase in the indicator means, and (4) what a decrease in the indicator means

3. Using your tree map, write two paragraphs about how economists determine the health of a nation’s economy and incorporate that into your current event for this week

Sponge: Wednesday, February 29 (write Qs & As)1. What occurs when the government spends

more money than it receives in revenues?

2. How does the federal government deal with such a condition?

Aggregate Supply (AS)

The total value of all goods and services that The total value of all goods and services that all firms would produce (supply) in a specific all firms would produce (supply) in a specific period of timeperiod of time

The supply of all goods and services within a country is its aggregate supply

Represented by a hypothetical aggregate Represented by a hypothetical aggregate supply curvesupply curve

Aggregate Demand (AD)

The total value of goods and services demanded The total value of goods and services demanded at all different price levelsat all different price levels

Demand for all goods and services within a nation combines to form aggregate demand

Represented by a hypothetical aggregate Represented by a hypothetical aggregate demand curvedemand curve

Factors that affect AD:

The amount of money that people save. If consumers collectively save less and spend

more, the increase in spending would increase AD, shifting the AD curve to the right.

Higher taxes and lower transfer payments (i.e., payments by the gov’t like Social Security, unemployment checks, welfare and disability payments), however, could reduce AD and shift the demand curve to the left.

Factors that affect AS:

Most increases in aggregate supply are tied to the cost of production. If production costs go down, AS tends to

increase and the aggregate supply curve shifts to the right.

On the other hand, higher prices for foreign oil, higher interest rates, and lower worker productivity tend to decrease AS and the AS curve would shift to the left.

Changes in AS and AD

If AD curve shifts to the left, then real GDP is falling and could signal a recession

If AS shifts right, then the economy is producing more goods and services at the same price level. This could signal improvement in production

ability brought about by technological and capital improvement.

AS and AD

• If AS exceeds AD, then an economy experiences an overall surplus• Results in drop in prices that could hurt the

economy if it occurs too fast (like the over-production that was one of the causes of the Great Depression)

AS and AD

• If AD exceeds AS, then the result would be an overall shortage• This usually leads to inflation as producers

increase prices to cover the lack of production and to ensure that supply does not run out

• Would be harmful if it occurs too drastically if people can no longer afford to pay high prices and stop consuming certain goods

AS-AD Video

Work Period: Wednesday, Feb. 29

1. Create a tree map of key economic indicators: Real GDP, Inflation Rate (CPI), and Unemployment Rate

a. Sub-categories under each should include (1) what each indicator measures, (2) how it is calculated, (3) what an increase in the indicator means, and (4) what a decrease in the indicator means

2. Using your tree map, write two paragraphs about how economists determine the health of a nation’s economy and incorporate that into your current event for this week

sponge: thursday, oct. 6 1. what are the three primary actors in an economy? 2. what are the factors...

Documents

countryreal gdp

year gdp data

economic activity

countrys economic growth

gdpper capita gdp

economic indicators

government spending

aggregate supply