Unit 2A: Measuring the Economy: Economic Goals

One of the most important indicators for a macroeconomy is GDP (Gross Domestic Product). This figure, the value of all goods and service produced in a country for a given year, let's government know the health of the economy and whether it is growing or shrinking. Often connected to this measure are two important statistics: unemployment rate and inflation rate. Congress has tasked the federal government with making sure that the overall health of the United States economy is good, and if it is not, it has tools to influence changes to make it so. In this unit we will be introduced to GDP, its components, Unemployment Rate, and the Inflation Rate.

Study Tools

Online Textbook Resources

Unfortunately, due to the age of the textbook, the publisher has removed all online content associated with our textbook. While we will use the book as an important source, the links given therein are no loner functioning. As a result, I will look online for other sources related to the topics in our text. Likewise, I encourage you to let me know of any useful websites that you come across in your studies so that I may add them to the site and share with everyone.

Constructing & Deconstructing GDP: The Income Approach

Using the Income Approach, this powerpoint demonstrates how to create GDP figure using given data and then work back to get other statistics such as NDP, PI, and DI.

Videos

Video Link: Learner.org

• Economics U$A: U.S. Economic Growth

  Nearly 30 minutes, this video examines the GNP, the benefits and shortcomings of its measurement. NOTE: GNP (Gross National Product) is a slightly different measure than GDP. GNP measures the use of foreign and domestic resources differently.

  From the website, By 1916 Henry Ford's assembly line had lowered the price of the Model T to $360, making it affordable and increasing its production exponentially in two years. In 1972 a group of experts known as the Club of Rome issued a report called "The Limits to Growth," predicting that raw materials could run out and world population growth and pollution could get out of hand. The Internet is a technological innovation that paved the way for other innovations such as smart phones. These stories highlight two important factors for economic growth: capital per worker (a.k.a. productivity) and technological innovation.

  If the video window does not pop up, in the windown that opens, scroll down to the title "12. U.S. Economic Growth" and click the "VoD" icon on the right.

• Economics U$A: GNP/GDP

  Nearly 30 minutes, discusses the importance and effectiveness of measuring GDP.

  From the website, In 1929 following the stock market bottoming out, Simon Kuznets led an investigative study resulting in the first national data collection of Gross National Product (GNP). Able to assess the overall production to consumption ratio of the U.S., Franklin Roosevelt entered World War II without jeopardizing the basic needs of his citizens. Although GNP was changed to GDP (Gross Domestic Product) in 1991, it still didn't account for all aspects of economic growth. Nonetheless, GDP data measurements help us understand the U.S. economy.

  If the video window does not pop up, in the windown that opens, scroll down to the title "15. GNP/GDP" and click the "VoD" icon on the right.

• Economics U$A: Boom and Bust

  Nearly 30 minutes, this video examines the ups and downs of the US economy through the idea of famous past economists.

  From the website, The nation's cycles of economic booms and busts were considered intrinsically capitalistic by Joseph Schumpeter who called them "methodic economic growth," and by Karl Marx who lambasted capitalism as inherently flawed. John Maynard Keynes held that recessions depended on the balance of aggregate demand and aggregate supply. Economist Hyman Minsky provided a promising explanation for the Great Recession of the 21st Century with his theory that the financial system plays a determining role in economic cycles.

  If the video window does not pop up, in the windown that opens, scroll down to the title "16. Booms and Busts" and click the "VoD" icon on the right.

• Economics U$A: Inflation

  Nearly 30 minutes, this video discusses the upward spiral of prices and how it relates to economics growth. But what are the benefits and drawbacks of this inflation?

  From the website, In the 1960s President Lyndon Baines Johnson continued fueling the domestic agenda of his "Great Society," keeping a low profile on the Vietnam War. But the U.S. overspent and inflation bubbled over. Anyone living on a marginally fixed income endured harsh consequences under inflation, and workers' strikes only brought costs up more. After his election in 1972, Richard Nixon ordered a 90-day nationwide price and wage freeze after the Federal Reserve failed to curb inflation. These stories show problems posed by the development of inflation in the post-war U.S. economy.

  If the video window does not pop up, in the windown that opens, scroll down to the title "19. Inflation" and click the "VoD" icon on the right.

Copyright M. Caggia 2014