Wednesday, December 3, 2014

#Money #GDP

A good quiz for my students: what is the economy?  Whenever you see or hear the word economy, what should you think of?

Production, distribution, and consumption of goods.

Every. Time.

So, when they see words like economic spillover, they know that it has something to do with the production, distribution, and consumption of goods.

I taught economic spillover yesterday, but didn't have time to post.  Economic spillover - which is now being called externalities - are the unintended positive and negative consequences of economic development.  When someone decides to build a factory, why do they build it?  Profit.  To make money.

Some by-products may be air pollution or noise pollution.  Maybe a Starbucks around the corner popped up to sell the workers coffee in the morning.  Did the factory owner build the factory because he wanted to pollute and drink Starbucks?  No.  He wanted to make a profit; those are externalities - they happened anyway.

GDP = Gross Domestic Product.  When my students see the word product, it should now be linked to economics, or the economy.  Things made.

What's the Gross Domestic Product of the United States?  16.8 Trillion.  What about Indiana?  246.4 Billlion.

So, if you took everything the U.S. made in a year and added the profit for all of it, you would get 16.8 trillion dollars.  Not bad.  We're #1 baby.  (That is, if you go by country...)  If you figure GDP per capita, then we're ranked 10th.

GDP and money are difficult to visualize.  I mean, a trillion dollars?  I can't really conceive how much a billion is.  Honestly, when I bought my house I had trouble understanding the high thousands...

This chart really helps with that:

I'm not sure if my blog will let you zoom in on the chart as much as xkcd does.  If it doesn't you should check it out there.  Each little green square represents one dollar.  Each little orange square represents $1000.  Yellow = $1,000,000,000.  Gray/purple = $1,000,000,000.  Blue = $1,000,000,000,000.

If you want the extra credit for reading and discussing today, start by asking this question: what is the economy?  Then discuss GDP.  Finally, look at that chart for a couple minutes.  On a scrap of paper, write down 2 things that stood out to you on that chart.  Write them down.  Have the adult you read and discussed with sign the paper.  Turn it in tomorrow.

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