Tuesday, April 20, 2010

GDP Debate

One of the early chapters in the AP Macroeconomics course, and a key part of any study of macroeconomics, deals with economic growth and its measurement. It leans heavily on understanding what gross domestic product (GDP) is; as well as the various components (consumer spending, investment spending, government spending, and net trade). This is an important idea because time is also spent examining the importance of capital and policy, among other things, in impacting GDP.

Another aspect of the study is the shortcomings of GDP as a measure of economic progress. Because it doesn't quantify items like leisure time, cultural amenities, etc., many feel it is not an adequate measure.

To explore the idea of GDP and its adequacies/inadequacies you might want to visit The Economist this week, where there is a debate: "This house believes that GDP growth is a poor measure of improving living standards."

You and your students can examine the statements, vote on the motion, and examine some background reading. This may be an interesting way to review that section of the course, especially if you are getting ready for the AP and/or IB exams.

Please share your thoughts about the site.

1 comment:

Erin Janie said...

As as student who has just learned about GDP and it's measurements, I am surprised by the amount of people who don't think it is an accurate measure. 71% think it is too narrow a measure to count, and then 29% who think it is adequate, that's all they think. They think it is "pretty good". Maybe because of my ignorance I trusted in this measurement from the second I learned about it, but now I'm thinking otherwise.