Capital and GDP 1-4 cha

Income The money that comes in. Your pay is your income. If he pays you rent, or if she pays
back money she borrowed, that counts as income.
Expenses The money that you pay out. You pay rent, you pay for food, you pay back the money
he let you borrow; you buy a hat; you go to the movies.
Capital A pile of money. An accumulation of wealth. A separate, huge amount of money that
is not part of your regular income or expenses. You havent spent ityet! Capital lets
you do something big! Most people dont have capitalbanks do!
Human The potential power of workers. The level of health, education, training, and skills of
Capital the workers in a country. If workers are healthy and expert, thats a high level of
human capital. If workers are hungry and sick, and have no education, thats a low
level of human capital. Skilled, healthy workers produce more.
Literacy The percentage of the population that can read at a fourth-grade level. Countries with
Rate a high literacy rate often have successful economiesbut not always.
Standard of An imprecise way of thinking about how rich or poor a country or a family is. It is
Living not a tool used by economists because it is not connected to data. But people use it in
conversation: Oh, that fabulous country has such a high standard of living.
Physical Equipment for business. Roads, factories, ports, railroads, airports, buildings. A
Capital country with a high level of physical capital is a good place to do business. A country
(Capital Goods) needs capital (a pile of money) to build physical capital (a railroad line leading to a
seaport). Examples of physical capital are also called capital goods.
Natural Gifts from nature. Trees, rivers, coal, oil. Natural resources help a countrys
Resources economy. Humans dont create natural resources; we figure out ways to use them as
raw materials and energy to make money!
Entrepreneur A person who has an idea and starts a business. Entrepreneurs usually start small, but
they need to borrow capital if they want to expand their businesses.
Gross Total. In economics, gross doesnt mean icky. The gross amount is the total, whole,
entire amount. Our lemonade stand grossed $7: thats our total income.
Domestic At home, within a country. International problems involve several countries.
Domestic problems are within one country. Domestic flights are within the US.
Gross Domestic The total value of all goods and services produced within one country in one year.
Product How much a country produces. This is one way to measure the size of a countrys
economy. How big is our countrys economy? The GDP of the US is $18.5 trillion.

Per Capita Per person. From Latin, for each head. Twelve apples shared by four people is three
apples per capita, or three apples for each person.
Per Capita Gross How much a country produces per person. That is, the total value of all goods and
Domestic services produced in one country in one year divided by the population. Per capita
Product GDP is how much a country produces divided by the number of people. This is the
 best tool to measure a countrys economy and a fair way to compare the economies of
different countries. Learn to use the per capita GDP to brag: My countrys per capita
GDP is higher than your countrys per capita GDP.
GDP If your countrys GDP last year was $200 million, and this year it is $210 million, your
Growth Rate economy grew at a rate of 5%. Your economy is five percent bigger than it was last
year. Thats great! A typical goal is to have a 3% GDP growth rate.

Capital and GDP N 1-4 cha hw

D C
Here are three fictional countries. Use this information to answer these questions.
We are using very simple numbers so you can practice.
Tishban Calormen Beruna
Tishban has rivers, forests, and an The population of Calormen is 20; the Beruna is a tiny country known for
ocean coast. It has a huge gross domestic product is $4000. The high-tech, entrepreneurial economy.
agricultural plain. It delivers food to literacy rate is 40%. Calormen is a The population is 10, and the GDP is
the continent on a network of hot, windy desert; it does not have an $10,000. Beruna has many factories
highways. Food processing plants ocean port. There is a small airport, and an excellent railroad system.
are located along the coast. The per no railroads, and one major highway The literacy rate is 99%. Four
capita GDP is $500. The population to the capital. In the industrial zone universities and two medical schools
is 30. Most people work in there are three small factories. conduct research.
agriculture or manufacturing.
Remember: Gross Domestic Product is the total value of all goods and services produced in one country in one year.
Per capita GDP is the GDP divided by the population. Its the GDP per person.
If you know the population and the per capita GDP, then multiply them to get the GDP.
1. What is the gross domestic product of Tishban? (the total, not per capita)
Per capita GDP _________ x population ______ = G D P _______________
2. What is the per capita GDP of Calormen? (the size of the economy per person)
G D P _____________ divided by population _________ = per capita GDP _______________
3. What is the per capita GDP of Beruna? (the size of the economy per person)
G D P _____________ divided by population _________ = per capita GDP _______________
4. Why cant I use GDP to compare the economies of two countries?
Make up two countries and some statistics to teach me why this wont work.

5. My country, Stagnolia, had a GDP growth rate of 1% last year. The GDP of Successistan grew at a rate of
4%. Uh. What might be three reasons why their economy is growing and mine is not?
6. The German historian Karl Marx published his great work about economics and inequality in 1867.
He called his book Capital. Why? What is capital, and why is it so important?