Thursday, May 05, 2011

Honors Business Economics: 5 May 2011

Beyond the Sound Bites (if time after the Quiz):

The Chapter 11 Section 2 Quiz is today.

Clear your desk except for a pencil. Once everyone is quiet, and no talking during the Quiz, we can begin. Be sure to put your name on the Quiz and the Scantron. You may write on both the Quiz and the Scantron.

If you finish early, you may take out non-class materials; once everyone is finished, put away the non-class materials. Then, I will collect the Scantron first, and then I will collect the Quiz.

Be sure your name is on both the Scantron and the Quiz.

If your name is not on the Quiz it will not be returned.

Soss Says U.S. May Not Reclaim Lost Jobs Until 2017

May 4 (Bloomberg) -- Neal Soss, chief economist for Credit Suisse Holdings USA Inc., talks about the Institute for Supply Management's report that service industries in the U.S. expanded in April at the slowest pace in eight months, and the outlook for the economy and labor market. The ISM's index of non-manufacturing companies declined to 52.8 last month from 57.3 in March. Soss speaks with Tom Keene on Bloomberg Television's "Surveillance Midday." (Source: Bloomberg)

5 May 2011: Jobless claims hit 8-month high.

The Chapter 11 Section 1 Quiz Make-up is today.

The Chapter 10 Test Make-up is today.

Skip #31; leave it blank.

The Chapter 10 Section 3 Quiz Make-up is today.

The Chapter 10 Section 2 Quiz Make-up is today.

The Chapter 10 Section 1 Quiz Make-up is today.

The Chapter 9 Test Make-up is today.

The Quiz 9.(4) Prep Page is available.

For the Make-up Quiz, consider the material found in Chapter 9 Section 3:

minimum tax, VAT (Value-Added Tax), flat tax, federal tax reform, business taxes, profits, tax burden, personal income rate, depreciation, investment tax credit, and, capital gains.


Standard feature:

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Please follow the steps below:

Click on the words "Access e-Inquirer" located on the gray toolbar underneath the green locker on the opening page.
Password: 10888

Unit 4 Macroeconomics: Performance and Stabilization

Chapter 12 Macroeconomic Performance

Chapter 12 - Fighting Unemployment-Inflation and Poverty, Spotlight Video, 2:19


Section Overview

Section 1: Measuring the Nation's Output and Income



underground economy

In-class assignment: with a partner, answer the following.

Economics: Off the Books: The Underground Economy, 4:36

What is the underground economy?
Is this income reported to the IRS?
What types of transactions are there?
What additional type is there?
How much do economists estimate makes up the underground economy?
What are the estimates about the taxes lost on this income?
Are there additional costs related to the underground economy?

base year

real GDP


In-class assignment: with a partner, answer the following.

Real GDP, 4:34

What is real GDP?
What do they refer to?
Define GDP and work through the definition by explaining the term.
What is included in GDP and what is not?
What activities do not form a part of GDP?
What is the tricky part?
What is GNP?
Where can "American" companies operate?
How does time relate to measuring of production?

current GDP

GDP per capita

gross national product (GNP)

GDP vs. GNP, 2:37

In-class assignment, with a partner, answer the following.

What is the difference between GDP and GNP?
How are these two terms different?
What is the difference?
Can you provide two examples?
Inference: which is better for producing wealth--GDP or GNP? Why?

Beechmontcrest: GDP vs. GNP.

Ownership vs. Location

The difference between GDP and GNP comes down to two factors: ownership and location.

GDP measures economic output based on location. If economic output occurs in the United States, then it is included in the GDP.

GNP measures economic output based on ownership. If the resources that produce the economic output are owned by an American entity, they are included in the GNP.

Honda and Ford

Honda of America is the largest automotive-related manufacturer in Ohio. There are four Honda plants in the state. Because these plants are located in the U.S., their output is included in the Gross Domestic Product (GDP). However, because these plants are owned by a corporation based in Japan, the output is not be included in the Gross National Product (GNP).

Now here is an opposite example: Ford Motor Company manufactures automobiles at its plant in Hermosillo, Mexico. Ford is an American corporation, so the output from this plant is included in the GNP. Since the plant is outside the United States, though, the output of the Hermosillo facility is not added to the GDP.

GDP, NDP, and National Income

Closely related to the concept of GDP is National Domestic Product, or NDP. NDP is based on a simple realization: it takes money to make money; or more precisely, it takes capital to make money.

In this context, “capital” is simply an economists’ term for goods that are used to manufacture other goods (and services) and deliver them to market. In the world of automotive manufacturing, this would mean machinery, factories, etc. But this is only one example. Across the economy, innumerable varieties of capital are consumed (and worn out) in order to make, sell, and deliver everything from washing machines to landscaping services.

Economists assume that all this “used-up capital” will be replaced. After all, businesses need to replace the items they consume and wear out in order to stay in business. This used-up capital is referred to as “capital depreciation.” Since it merely represents what business must replace if they want to keep running, it is deducted when economists evaluate the economy’s performance. When capital depreciation is subtracted from the gross domestic product, GDP, the difference between the two is called net domestic product, or NDP:

net national product (NNP)

national income (NI)

personal income (PI)

disposable personal income (DPI)


unrelated individual


output-expenditure model

net exports of goods and services

12.1 Reading Strategy

In-class assignment, with a partner, fill in the graphic.

Complete the graphic organizer by describing how the different economic sectors contribute to the nation's economic activity.

Issues in the News

GDP posts smallest gain in 3 years

GDP--The Measure of National Output

Measuring Current GDP

Some Things Are Excluded

Current GDP vs. Real GDP

GDP per Capita

Limitations of GDP

The Global Economy and You

A Measure of Economic Performance and Well-Being

In-class assignment, with a partner, answer the following.

p. 323, Reading Check


What does GDP measure, and why is it important?

GDP--The Measure of National Income

Gross National Product

Net National Product

National Income

Personal Income

Disposable Personal Income

In-class assignment, with a partner, answer the question.

p. 324, Reading Check


What are the different measures of national income?

Economic Sectors and Circular Flows

In-class assignment, with a partner, answer the following.

Figure 12.3 Circular Flow of Economic Activity

In your own words, describe the circular flow of economic activity.


Consumer Sector

Investment Sector

Government Sector

Foreign Sector

In-class assignment, with a partner, answer the question.


How do households and families differ?

p. 327, Reading Check

The Output-Expenditure Model

p. 326, Reading Check


How does the foreign sector fit into the output-expenditure model?

12.1 Review

In-class assignment, with a partner, fill in the graphic.

Use the graphic organizer to compare GDP and GNP.

Profile in Economics

John Kenneth Galbraith

p. 328, #1, Which viewpoint made Galbraith an iconoclast to other economists?

2. How might living through the Great Depression lead to liberal economic thought?

Section 2: Population and Economic Growth

The population census, an official count of all people living in the United States, must be conducted every 10 years. The annual rate of population growth was more than three percent until the Civil War, but it has declined steadily since then and is now less than one percent annually. Factors contributing to this trend are a replacement level fertility rate, a longer life expectancy, and constant net immigration. The racial and ethnic mix will also change with gains made by Asians, Hispanics, and African Americans. Changes are gradual and can usually be predicted.


urban population

rural population

center of population


baby boom

population pyramid

dependency ratio


fertility rate

life expectancy

net immigration

12.2 Reading Strategy

In-class assignment, with a partner, complete the graphic organizer by identifying changes in the United States in the listed categories.

12.2 Review

In-class assignment, with a partner, answer the question.

Section 3: Poverty and the Distribution of Income

People are classified as living in poverty if their incomes fall below a predetermined level, or threshold. Economists are interested in how many people are in poverty and how it is dispersed in households. There are eight reasons why incomes vary: education, wealth, tax law changes, decline of unions, more service jobs, monopoly power, discrimination, and changes in family structures. In order to assist people in poverty, the government has established numerous anti-poverty programs. Most of them are classified under welfare- income assistance, general assistance, social service programs, tax credits, enterprise zones, workfare programs, and negative income tax.

Figure 12.4 Center of Population, 1790-2000


Figure 12.9 Poverty in the United States: total Number and Rate


Chapter 11 Resources


Figure 11.1 Overview of the Financial System


Figure 11.2 The Power of Compound Interest


Figure 11.7 How Much Money Will You Have at Retirement?

Chapters 8-11


Wisconsin Labor Protests - Noodles, 1:36

Homemaking Knowledge Contributes To The Enrichment of Life, 9:19

From the "Why Study Home Economics?" (1955); Two teenage girls learn how a knowledge of homemaking can contribute to the enrichment of life. They also learn about the vocational opportunities available to home economic students. Home economics, is an academic discipline which combines aspects of consumer science, nutrition, cooking, parenting and human development, interior decoration, textiles, family economics, housing, apparel design and resource management as well as other related subjects. Producer: Centron Corporation; Creative Commons license: Public Domain.


SuperMariObama, :59

7th, Slo-mo Jello

Email (or hand in hard copy) to

Thursday HW
1. p. 303, #6-8.
Friday HW
1. p. 303, #9.