DPQ
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Transcript of DPQ
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DPQDPQ
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Capital gains tax?Capital gains tax?
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What’s a second?What’s a second?
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1/25 Test Results1/25 Test Results
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Things to know from Things to know from last weeklast week
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Things to know from Things to know from last weeklast week Supply side economicsSupply side economics
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Things to know from Things to know from last weeklast week
Supply side economicsSupply side economics Laffer CurveLaffer Curve
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Things to know from Things to know from last weeklast week
Supply side economicsSupply side economics Laffer CurveLaffer Curve Keynesian economicsKeynesian economics
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National outputNational output
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Fallacy of CompositionFallacy of Composition
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Fallacy of CompositionFallacy of Composition
The mistaken assumption that The mistaken assumption that what applies to a part applies what applies to a part applies automatically to the wholeautomatically to the whole
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Fallacy of CompositionFallacy of Composition
The mistaken assumption that The mistaken assumption that what applies to a part applies what applies to a part applies automatically to the wholeautomatically to the whole
Example?Example?
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Fallacy of CompositionFallacy of Composition
The mistaken assumption that The mistaken assumption that what applies to a part applies what applies to a part applies automatically to the wholeautomatically to the whole
Example?Example? ““Saving” jobs in the U.S. auto Saving” jobs in the U.S. auto
industryindustry
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Fallacy of CompositionFallacy of Composition
The mistaken assumption that The mistaken assumption that what applies to a part applies what applies to a part applies automatically to the wholeautomatically to the whole
Example?Example? ““Saving” jobs in the U.S. auto Saving” jobs in the U.S. auto
industryindustry Obama spent at least $85 billion Obama spent at least $85 billion
to bail out GM and Chryslerto bail out GM and Chrysler
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Fallacy of CompositionFallacy of Composition
The mistaken assumption that what The mistaken assumption that what applies to a part applies automatically applies to a part applies automatically to the wholeto the whole
Example?Example? ““Saving” jobs in the U.S. auto industrySaving” jobs in the U.S. auto industry Obama spent at least $85 billion to bail Obama spent at least $85 billion to bail
out GM and Chryslerout GM and Chrysler But how many jobs elsewhere did it But how many jobs elsewhere did it
cost?cost?
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Why would auto Why would auto bailout cost jobs bailout cost jobs elsewhere?elsewhere?
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Why would auto Why would auto bailout cost jobs bailout cost jobs elsewhere?elsewhere? Everything the government Everything the government
spends is taken from somebody spends is taken from somebody elseelse
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Why would auto Why would auto bailout cost jobs bailout cost jobs elsewhere?elsewhere? Everything the government Everything the government
spends is taken from somebody spends is taken from somebody elseelse
The taxes to support above The taxes to support above market-rate UAW wages and market-rate UAW wages and benefits could have been used to benefits could have been used to support the next Google or Applesupport the next Google or Apple
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Why would auto Why would auto bailout cost jobs bailout cost jobs elsewhere?elsewhere? Everything the government spends Everything the government spends
is taken from somebody elseis taken from somebody else The taxes to support above The taxes to support above
market-rate UAW wages and market-rate UAW wages and benefits could have been used to benefits could have been used to support the next Google or Applesupport the next Google or Apple
Government is notoriously Government is notoriously inefficientinefficient
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Measuring National Measuring National OutputOutput
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Measuring National Measuring National OutputOutput GDP: gross domestic productGDP: gross domestic product
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Measuring National Measuring National OutputOutput GDP: gross domestic productGDP: gross domestic product GNP: gross national productGNP: gross national product
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Gross National ProductGross National Product
The sum total of all the goods and The sum total of all the goods and services produced by the services produced by the country’s people in any given country’s people in any given year, year, whereverwherever they may be they may be locatedlocated
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Gross Domestic Gross Domestic ProductProduct
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Gross Domestic Gross Domestic ProductProduct The sum total of all goods and The sum total of all goods and
services produced services produced withinwithin a a nation’s borders including that by nation’s borders including that by foreign nationalsforeign nationals
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Gross Domestic Gross Domestic ProductProduct The sum total of all goods and The sum total of all goods and
services produced services produced withinwithin a a nation’s borders including that by nation’s borders including that by foreign nationalsforeign nationals
GDP is the preferred GDP is the preferred measurement of contemporary measurement of contemporary economists, used by the U.S. economists, used by the U.S. since 1992since 1992
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The two main The two main components of GDPcomponents of GDP
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The two main The two main components of GDPcomponents of GDP Private consumption and public Private consumption and public
sector spendingsector spending
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The two main The two main components of GDPcomponents of GDP Private consumption and public Private consumption and public
sector spendingsector spending In 2010, U.S. GDP was $14.7 In 2010, U.S. GDP was $14.7
trilliontrillion
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The two main The two main components of GDPcomponents of GDP Private consumption and public Private consumption and public
sector spendingsector spending In 2010, U.S. GDP was $14.7 In 2010, U.S. GDP was $14.7
trilliontrillion Private consumption was $10.4 Private consumption was $10.4
trilliontrillion
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The two main The two main components of GDPcomponents of GDP Private consumption and public Private consumption and public
sector spendingsector spending In 2010, U.S. GDP was $14.7 In 2010, U.S. GDP was $14.7
trilliontrillion Private consumption was $10.4 Private consumption was $10.4
trilliontrillion Private investment was $1.8 Private investment was $1.8
trilliontrillion
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The two main The two main components of GDPcomponents of GDP Private consumption and public Private consumption and public
sector spendingsector spending In 2010, U.S. GDP was $14.7 trillionIn 2010, U.S. GDP was $14.7 trillion Private consumption was $10.4 Private consumption was $10.4
trilliontrillion Private investment was $1.8 trillionPrivate investment was $1.8 trillion Government spending was $3 Government spending was $3
trillion, about 20%trillion, about 20%
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Hey, wait a minute!Hey, wait a minute!
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Hey, wait a minute!Hey, wait a minute!
Problem 1: The totals are $15.2 Problem 1: The totals are $15.2 trillion, not $14.7 trilliontrillion, not $14.7 trillion
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Hey, wait a minute!Hey, wait a minute!
Problem 1: The totals are $15.2 Problem 1: The totals are $15.2 trillion, not $14.7 trilliontrillion, not $14.7 trillion
Problem 2: Federal budget alone Problem 2: Federal budget alone in 2010 was $3.69 trillionin 2010 was $3.69 trillion
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Common GDP FormulaCommon GDP Formula
GDP = C + I + G + (X − M)GDP = C + I + G + (X − M)
C is consumptionC is consumptionI is gross investmentI is gross investmentG is government spendingG is government spendingX is exportsX is exportsM is importsM is imports
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Top 5 GDP NationsTop 5 GDP Nations
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Top 5 GDP NationsTop 5 GDP Nations
U.S.................$14.6 trillionU.S.................$14.6 trillion PRC (China)......$5.7 trillionPRC (China)......$5.7 trillion Japan...............$5.3 trillionJapan...............$5.3 trillion Germany..........$3.3 trillionGermany..........$3.3 trillion France.............$2.6 trillionFrance.............$2.6 trillion
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Top 5 GDP Nations, Top 5 GDP Nations, Per CapitaPer Capita
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Top 5 GDP Nations, Top 5 GDP Nations, Per CapitaPer Capita LuxembourgLuxembourg NorwayNorway QatarQatar SwitzerlandSwitzerland DenmarkDenmark
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Top 5 GDP Nations, Top 5 GDP Nations, Per CapitaPer Capita LuxembourgLuxembourg NorwayNorway QatarQatar SwitzerlandSwitzerland DenmarkDenmark #10: United States#10: United States
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Top 5 GDP Nations, Top 5 GDP Nations, Per CapitaPer Capita LuxembourgLuxembourg NorwayNorway QatarQatar SwitzerlandSwitzerland DenmarkDenmark #10: United States#10: United States #95: China#95: China
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“Figures often beguile me, particularly when I have the arranging of them myself; in which case the remark attributed to Disraeli would often apply with justice and force: ‘There are three kinds of lies: lies, d**n lies and statistics.’"
Mark Twain's Own Autobiography: The Chapters from the North American Review
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Unintended Unintended ConsequencesConsequences
““Chili’s Feels Heat to Pare Costs”Chili’s Feels Heat to Pare Costs”
Wall Street JournalWall Street Journal, 1/28/11, 1/28/11
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Assignment for Feb. 15Assignment for Feb. 15
Read and study chapter 16 of Read and study chapter 16 of Basic EconomicsBasic Economics: “Money and the : “Money and the Banking System”Banking System”