Macroeconomics. Motivation n How many students live in a household with one parent at home? n What...
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Transcript of Macroeconomics. Motivation n How many students live in a household with one parent at home? n What...
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Macroeconomics
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Motivation How many students
live in a household with one parent at home?
What are the advantages and disadvantages of having this type of arrangement?
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Objective The students will learn the three
macroeconomic goals. Students will know the characteristics
of the the Gross National Product (GNP).
Students will distinguish the GNP from the GDP.
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Objective (Continued)Students will know the
limitations of the GDP.Students will know the
characteristics of the business cycle.
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3 Macroeconomic Goals
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Gross National Product
The total dollar value of all final goods and services produced in the economy during one year’s time.
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Business Cycle
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Business Cycle
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Gross Domestic ProductThe total dollar value of all
final goods and services produced by resources in the United States (regardless of who owns them) during one year’s time.
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Composition of the GNP
1. Consumer goods (Personal Consumption) 60%
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Composition of the GNP
2.Physical Investment (Business) 20%
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Composition of the GNP
3) Governmental Purchases 20%
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Composition of the GNP
4) Foreign Investment ?%
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Limitations of the GDP http://
hanseconomics.com/2012/01/29/the-shortcomings-of-gdp-as-a-measure-of-economic-growth/ and http://econperspectives.blogspot.com/2008/08/limitations-of-using-gdp-as-measure-of.html.
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Limitations of the GDP1. GDP
Doesn’t Consider the Kinds of Items Produced.
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Limitations of the GDP2) GDP
Doesn’t Measure Amount Produced Per Person.
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Limitations of the GDP3) GDP
Doesn’t Measure How Goods are Distributed.
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4) GDP Doesn’t Allow for Changing Price Levels.
Limitations of the GDP
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Limitations of the GDP5. GDP Doesn’t Include Unpaid House Work.
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6. GDP Doesn’t Include Barter.
Limitations of the GDP
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Limitations of the GDP
7. GDP Doesn’t Measure Quality of Items.
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Limitations of the GDP8. GDP Doesn’t Recognize the Value of Leisure Time.
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Closure Handout 12.1
The Gross National Product and 15.2 The Case Against Economic Growth