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And finance Allah Shmoop What Our government purchases of goods

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and services Okay people The U S Economy is big

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big I tell you Big eighteen trillion dollars big and

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told a lot of Big Macs Dizzy Plus she's from

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Amazon and Netflix subscription Yeah it's all counted in there

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Well who's buying all that stuff All of us of

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course but the biggest single customer Well you can probably

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guess where we're going with this one from the title

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of the video but we'll get back to that in

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a second The first couple of basic So you know

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what we're talking about The U S economy is measured

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in GDP an acronym that stands for gross domestic product

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You have you ever seen a baby being born That's

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pretty gross domestic product but well that's not what we're

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talking about here The GDP We're talking about measures all

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the stuff produced in a country All the products made

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and all the services rendered its the grand accounting of

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what every American does at work every day and like

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an example of a service is rendered would be like

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an accountant sending you a bill for four hours of

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doing your taxes like that's a service But who's buying

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all that stuff we make Well on the other end

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of the GDP number is all a bunch of people

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paying money for all those Big Macs and Disney Plus

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she's and subscriptions to Netflix All right now back to

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the original question Who is the biggest single customer for

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all this stuff No not your hoarder Aunt Millie It's

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the federal government Uh all right Now collectively the biggest

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customer is well all of us each one of us

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buying Starbucks frappes on the way home from work and

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ordering Captain America T shirts at three a M And

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Gas and Millie subscribing to forty five different magazines that

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she actually has physically delivered to her house on dead

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trees That's called consumer spending It makes up the biggest

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part of the U S GDP and collectively consumer spending

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makes up About two thirds of the economy specifically represents

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about twelve point eight trillion dollars of the eighteen point

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six trillion dollars total of GDP in two thousand eighteen

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here But none of us individually make a big dent

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on our own It takes a village to buy all

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that stuff The other third of the economy is split

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pretty evenly between government and business spending In fact government

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has the slight edge there representing three point three trillion

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dollars worth of GDP purchases By comparison businesses ill spent

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just under three point one trillion ish last year So

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governments in general fueled about a sixth of total purchases

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in the economy that counts all levels of government federal

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state and local So that's government spending on goods and

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services It's an economic stat that tracks the government contribution

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to gross domestic product Think of GDP is a simple

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equation It consists of consumer spending plus business spending plus

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government spending plus net exports right net exports representing the

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amount of U S goods and services bought by people

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overseas Minus the foreign stuff you know we buy from

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them That's what net Well there are some things keep

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in mind about government spending we're talking about here There

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are a few big chunks of government budgets that don't

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really fit into the equation For instance this kind of

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government spending doesn't count interest payments on the debt Those

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debt service payments equate to about six percent of the

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federal budget huge number It also doesn't count what's called

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transfer payments well This category includes things like Social Security

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payments where the government just sent someone to check You

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know money is simply transferred from the government's bank account

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then to someone else's Well the figure is only looking

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in situations where the government directly buys a good or

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a service meaning the government's contribution to G P Right

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now Well it's a figure included Social Security payments Well

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then the amount would get counted twice right once when

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the government sent the money and a second time when

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the person went out and you know about food with

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it Well to avoid that double counting transfer payments are

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left out of the figure Okay quick review People care

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about government purchases of goods and services because well it's

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a major contributor to GDP which measures overall economic production

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It includes all the government purchases of all levels However

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the stats also include a breakdown of federal spending versus

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spending it state and local levels Not everything in government

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budget you are included The stats don't include debt service

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They also don't include what's called transfer payments you know

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things like Social Security and other similar welfare payments While

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consumer spending makes up the biggest chunk of GDP with

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the two third share the federal government makes up the

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biggest single purchaser Yeah even if Aunt Millie gives it 00:04:20.922 --> [endTime] a run for the money

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