1. Macroeconomics

2. 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?

3. 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.

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

5. 3 Macroeconomic Goals

6. Gross National Product n The total dollar value of all final goods and services produced in the economy during one year’s time.

7. Business Cycle

8. Business Cycle

9. 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.

10. Composition of the GNP n 1. Consumer goods (Personal Consumption) 60%

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

12. Composition of the GNP n 3) Governmental Purchases 20%

13. Composition of the GNP n 4) Foreign Investment ?%

14. Limitations of the GDP n http://hanseconomics.c om/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.

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

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

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

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

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

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

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

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

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