Macroeconomics

Motivation n How many students live in a household with one parent at home? n What are the advantages and disadvantages of having this type of arrangement?

Objective n The students will learn the three macroeconomic goals. n Students will know the characteristics of the the Gross National Product (GNP). n Students will distinguish the GNP from the GDP.

Objective (Continued) n Students will know the limitations of the GDP. n Students will know the characteristics of the business cycle.

3 Macroeconomic Goals

Gross National Product n 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 Product n The 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 n 1. Consumer goods (Personal Consumption) 60%

Composition of the GNP n 2.Physical Investment (Business) 20%

Composition of the GNP n 3) Governmental Purchases 20%

Composition of the GNP n 4) Foreign Investment ?%

Limitations of the GDP n om/2012/01/29/the- shortcomings-of-gdp- as-a-measure-of- economic-growth/ and /limitations-of-using- gdp-as-measure- of.html.

Limitations of the GDP n 1. GDP Doesn’t Consider the Kinds of Items Produced.

Limitations of the GDP n 2) GDP Doesn’t Measure Amount Produced Per Person.

Limitations of the GDP n 3) GDP Doesn’t Measure How Goods are Distributed.

n 4) GDP Doesn’t Allow for Changing Price Levels. Limitations of the GDP

Limitations of the GDP n 5. GDP Doesn’t Include Unpaid House Work.

n 6. GDP Doesn’t Include Barter. Limitations of the GDP

Limitations of the GDP n 7. GDP Doesn’t Measure Quality of Items.

Limitations of the GDP n 8. GDP Doesn’t Recognize the Value of Leisure Time.

Closure n Handout 12.1 The Gross National Product and 15.2 The Case Against Economic Growth