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Macroeconomics
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?
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.
Objective (Continued)Students will know the
limitations of the GDP.Students will know the
characteristics of the business cycle.
3 Macroeconomic Goals
Gross National Product
The total dollar value of all final goods and services produced in the economy during one year’s time.
Business Cycle
Business Cycle
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.
Composition of the GNP
1. Consumer goods (Personal Consumption) 60%
Composition of the GNP
2.Physical Investment (Business) 20%
Composition of the GNP
3) Governmental Purchases 20%
Composition of the GNP
4) Foreign Investment ?%
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.
Limitations of the GDP1. GDP
Doesn’t Consider the Kinds of Items Produced.
Limitations of the GDP2) GDP
Doesn’t Measure Amount Produced Per Person.
Limitations of the GDP3) GDP
Doesn’t Measure How Goods are Distributed.
4) GDP Doesn’t Allow for Changing Price Levels.
Limitations of the GDP
Limitations of the GDP5. GDP Doesn’t Include Unpaid House Work.
6. GDP Doesn’t Include Barter.
Limitations of the GDP
Limitations of the GDP
7. GDP Doesn’t Measure Quality of Items.
Limitations of the GDP8. GDP Doesn’t Recognize the Value of Leisure Time.
Closure Handout 12.1
The Gross National Product and 15.2 The Case Against Economic Growth
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