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Economics 12

Economics 12. Ms. Park. Next Presenters. Nicole Justin. Text book #2. GDP = Consumption + Gross Investment + Government Purchases + Net Exports Gross Investment = Net investment + depreciation GNP = GDP – net investment income to the rest of the world

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Economics 12

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  1. Economics 12 Ms. Park

  2. Next Presenters • Nicole • Justin

  3. Text book #2 • GDP = Consumption + Gross Investment + Government Purchases + Net Exports • Gross Investment = Net investment + depreciation • GNP = GDP – net investment income to the rest of the world • NDI = GDP – indirect taxes - depreciation - allowances - statistical discrepancy

  4. Textbook #2 Cont. • PI = NDI + Government transfer payments + Other payments to persons – earnings not paid out to persons – net investment income • DI = Household incomes – Personal taxes and other personal transfers to the government • Household Incomes = Personal Income (PI)

  5. Textbook #6 • Each of the following cases applies to a country whose per capita real GDP has been rising at 1% per year.  PER CAPITA REAL GDP IS RISING. • Explain whether GDP overstates or understates the change in LIVING STANDARDS

  6. Textbook #2 Q1: The average amount of leisure time for workers have decreased 5. Leisure: With increased leisure, GDP understates economic well-being

  7. Textbook #6:Limitations of GDP Q2: The relative importance of nonmarket sector has decreased 1. Excluded activities: GDP does not include some types of productive activities. This can understate economic activity and living standards. • Non-market activities: homework, unpaid childcare • Underground activities: smuggling, under-the-table money

  8. Tasks to do: • Assignment from last class: Textbook #1 • Redo: Assignment #3: Textbook #5, Handout #3 &4 (I will only remark assignments that received lower than 20/25) Assignment #5: Textbook #2 &6 • Hand-in Original Assignment with the New Assignment

  9. Bonus Assignment • If you get over 90% on your bonus assignment, I will add 2% to your test score • Come get your bonus assignment, only after you have re-submitted your assignments • Must be handed in before the bell

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