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chapter3 - TheU.S.Economy AGlobalView CHAPTER2...

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CHAPTER 2 The U.S. Economy:  A Global View
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What America Produces With less than 5 percent of the world’s population . .  and 12 percent of the world’s arable land . . the U.S. produces more than 20 percent of the  world’s output. LO1
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GDP Comparisons Gross Domestic Product  ( GDP ) is the total market  value of all final goods and services produced  within   a nation’s borders in a given time period. It is the basic measure of an economy’s size. LO1
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Comparative Output 2005 Gross Domestic Product (GDP) (in trillions of U.S. dollars) LO1
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Per Capita GDP Per Capita GDP  is the dollar value of GDP divided by  total population; average GDP. It indicates how much output the average person  would get if all output were divided up evenly among  the population. LO1
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GDP Per Capita Around the World LO1
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GDP Growth Economic growth  is the increase in output (real  GDP) – an expansion of production possibilities. U.S. output grows by roughly 3 percent per year. U.S. population grows by 1 percent per year.
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U.S. Output and Population Growth Since 1900 200 400 600 800 1,000 1,200 1,400 1,600 1,800 INDEX OF REAL OUTPUT AND POPULATION (1900 = 100) 1920 1940 1960 1980 YEAR 2000 1900 Increasing GDP per capita Real GDP Population
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Poor Nations The populations of rich countries are growing slowly  so that gains in per capita GDP are easily achieved. The populations of the poorest countries are still  growing rapidly, making it difficult to raise living  standards.
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The Mix of Output A century ago, about two-thirds of U.S. output  consisted of goods while one-third of output  consisted of services. Today, nearly 75 percent of U.S. output consists of  services, not goods. LO1
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The Mix of Output The  relative  decline in goods production does not  mean the U.S. is producing  fewer  goods than before.
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