Name _________________________________________________ Per. ________
GDP Activist Webquest
Scenario: You are an activist who wants to save the world. You are interested in creating an organization to help empower the poor. You want to understand what their problems are and how you can help them exit poverty by giving them the tools they need to be self-sustainable or lifting the obstacles that block them.
The problem is you need to identify who are the people that need your help the most, in other words, who are the poorest of the poor? How can someone decide on how well-off people are and whether their standard of living (or level of well-being) is satisfactory? That's pretty hard...
You suddenly remember that in school you where taught about an index called GDP (Gross Domestic Product). It is supposed to be able to offer an idea about the healthy of an economy which is a reflection of people's level of well-being...Or that's what you've heard..Maybe that's it?! Maybe this index can help you decide on who really needs your help the most, so you can focus your efforts there and bring maximum value through the organization you are designing!
Task: You decide that you will find out more information on GDP and create a chart where you will compare The USA to two other countries of your choice as to their overall standard of living.
In that chart you can use the GDP but also any other index you may feel can supplement and improve your understanding. You will then conclude which of the three countries is the one in most need. You will need to explain the rational behind your choice of country in most need and back it up with data from your web search. Always keep this question in mind: is the GDP telling me all I need to know to identify the population in most need? How can I get an even more accurate picture?
At the end, each group will present their choice and the class will decide which of the presented countries will get to receive the activist's organization.
Process: First you will be assigned to a team of three students. Once in your group you will agree on the 2 countries you will pick to compare in addition to the US, which is mandatory (so the countries are 3 in total , USA+2 more). You will then create a chart where you will compare the countries and decide on the one with the lowest living standards.
You will proceed to present your work in class.
The class will vote for the country in most need (lowest living standards) based on the argumentation presented by each group.
The information required can be extracted from the following resources:
1.Human development reports:
http://hdrstats.undp.org/indicators/indicators_table.cfm
2.GDP comparisons
http://www.indexmundi.com/g/r.aspx?c=ca&v=65
3.World Bank
http://geo.worldbank.org/
4.CIA:the world FactBook
https://www.cia.gov/library/publications/the-world-factbook/
5.Greek Statisctic Beureau
http://www.statistics.gr/
You are free however, to search and find additional info. Please be sure that the sites you will be using as sources are credible (eg. belong to well known statistics providers, are state-owned, sponsored by the EU, or an international organization like the UN)
SAMPLE CHART
Country 1 Country 2 Country 3
Name
GDP 2008
GDP 2009
GDP Growth Rate
Unemployment Rate
Inflation Rate
Infant Mortality Rate
Summary of Economy
Exports
Imports
Wednesday, February 25, 2009
Sunday, February 22, 2009
Unit 3 Key Ideas
Unit 3: Aggregate Demand and Aggregate Supply: Fluctuations in Outputs and Prices
Aggregate demand (AD) and aggregate supply (AS) curves look and operate much like the supply and demand curves used in microeconomics. However, these macroeconomic AD and AS curves depict different things, and they change for different reasons than microeconomic demand and supply curves. AD and AS curves can be used to illustrate changes in real output and the price level of an economy.
The downward sloping aggregate demand curve is explained by the wealth effect, the income effect, and the foreign purchases effect.
The aggregate supply curve is divided into three ranges: the horizontal or Keynesian range, the upward sloping or intermediate range, and the vertical or classical range.
Changes in the price level and output are illustrated by shifts and movements along the aggregate demand and supply curves.
Shifts in the aggregate demand can change the level of output and the price level or both. The determinants of AD include changes in consumer spending, investment spending, government spending, and net export spending.
Shifts in aggregate supply can also change the level of output and the price level. Determinants of AS include changes in input prices, productivity, the legal institutional environment, and the quantity of available resources.
Changes in outputs can also be illustrated by the Keynesian expenditure-output mode. This model differs from the AD/AS model because in the Keynesian model the price level is assumed to be constant. The Keynesian model has fixed prices.
The AD/AS model can be reconciled with the Keynesian expenditure-output model. In the Keynesian (horizontal) range of the AS curve, both models are identical. The models differ in the intermediate and vertical range of the AS curve.
Autonomous spending is the part of AD that is independent of the current rate of economic activity.
Induced spending is that part of AD that depends upon the current rate of economic activity.
The multiplier is a number that influences the relationship of changes in autonomous spending to changes in real GDP.
The formula for calculating the multiplier is: M=1/MPS or M=1/1-MPC
The multiplier results from subsequent rounds of induced spending that occur when autonomous spending changes.
Keynesian economists believe the equilibrium levels of GDP can occur at less than or more than the full-employment level of GDP. Classical economists believe that long-run equilibrium can occur only at full employment.
Fiscal policy consists of government actions that may increase or decrease aggregate demand. These actions involve changes in government spending and taxing.
The government uses an expansionary fiscal policy to try to increase or decrease aggregate demand. These actions involve changes in government spending and taxing.
The government uses a contractionary fiscal policy to try to decrease aggregate demand during a period of inflation. The government may increase taxes, decrease spending, or do a combination of the two.
Discretionary fiscal policy means the federal government must take deliberate action or pass a new law changing taxes or spending. The automatic or built-in stabilizers change government spending or taxes without new laws being passed or deliberate action being taken.
The balanced budget multiplier indicates that equal increases or decreases in taxes and government spending increase or decrease equilibrium GDP by an amount equal to that increase or decrease.
Stagflation can be explained by a decrease in aggregate supply.
Aggregate demand (AD) and aggregate supply (AS) curves look and operate much like the supply and demand curves used in microeconomics. However, these macroeconomic AD and AS curves depict different things, and they change for different reasons than microeconomic demand and supply curves. AD and AS curves can be used to illustrate changes in real output and the price level of an economy.
The downward sloping aggregate demand curve is explained by the wealth effect, the income effect, and the foreign purchases effect.
The aggregate supply curve is divided into three ranges: the horizontal or Keynesian range, the upward sloping or intermediate range, and the vertical or classical range.
Changes in the price level and output are illustrated by shifts and movements along the aggregate demand and supply curves.
Shifts in the aggregate demand can change the level of output and the price level or both. The determinants of AD include changes in consumer spending, investment spending, government spending, and net export spending.
Shifts in aggregate supply can also change the level of output and the price level. Determinants of AS include changes in input prices, productivity, the legal institutional environment, and the quantity of available resources.
Changes in outputs can also be illustrated by the Keynesian expenditure-output mode. This model differs from the AD/AS model because in the Keynesian model the price level is assumed to be constant. The Keynesian model has fixed prices.
The AD/AS model can be reconciled with the Keynesian expenditure-output model. In the Keynesian (horizontal) range of the AS curve, both models are identical. The models differ in the intermediate and vertical range of the AS curve.
Autonomous spending is the part of AD that is independent of the current rate of economic activity.
Induced spending is that part of AD that depends upon the current rate of economic activity.
The multiplier is a number that influences the relationship of changes in autonomous spending to changes in real GDP.
The formula for calculating the multiplier is: M=1/MPS or M=1/1-MPC
The multiplier results from subsequent rounds of induced spending that occur when autonomous spending changes.
Keynesian economists believe the equilibrium levels of GDP can occur at less than or more than the full-employment level of GDP. Classical economists believe that long-run equilibrium can occur only at full employment.
Fiscal policy consists of government actions that may increase or decrease aggregate demand. These actions involve changes in government spending and taxing.
The government uses an expansionary fiscal policy to try to increase or decrease aggregate demand. These actions involve changes in government spending and taxing.
The government uses a contractionary fiscal policy to try to decrease aggregate demand during a period of inflation. The government may increase taxes, decrease spending, or do a combination of the two.
Discretionary fiscal policy means the federal government must take deliberate action or pass a new law changing taxes or spending. The automatic or built-in stabilizers change government spending or taxes without new laws being passed or deliberate action being taken.
The balanced budget multiplier indicates that equal increases or decreases in taxes and government spending increase or decrease equilibrium GDP by an amount equal to that increase or decrease.
Stagflation can be explained by a decrease in aggregate supply.
Thursday, February 19, 2009
Thursday, February 12, 2009
Wednesday, February 4, 2009
Unit II AP Test Review Concepts
Unit II Review
• Macroeconomics is the study of the economy as a whole; microeconomics is the study of individual parts of the economy such as businesses, households, and prices. Macroeconomics looks at the forest, microeconomics at the trees.
• A circular-flow diagram illustrates the major flows of goods and services, resources, and money in an economy. It shows how changes in those flows can alter the level of goods and services, employment, and income.
• Gross Domestic Product (GDP) is the market value of all final goods and services produced in a nation in one year; it is the most important measurement of production and output.
• GDP counts only final goods and services; it does not count intermediate goods and services.
• GDP also does not count second hand goods; the buying and selling of stocks and bonds; and transfer payments such as social security benefits, unemployment compensation, and certain interest payments.
• GDP includes profits earned by foreign-owned businesses and income earned by foreigners in the United States, but it excluded profits earned by U.S.-owned companies overseas and income earned by U.S. citizens working abroad.
• GDP is most easily calculated in two ways; (1) add all the consumption, investment, and government expenditures plus net exports; and (2) add all the incomes received by owners of productive resources in the economy.
• Gross National Product (GNP) includes profits earned by U.S.-owned companies overseas and income earned y U.S. citizens working abroad, but it does not include profits earned by foreign-owned companies in the United States or income earned by foreigners working in this country.
• Other measures derived from national income accounting measures include Net National Product (NNP), National Income (NI), Personal Income (PI), and Disposable Personal Income (DPI).
• In 1991, the basic measurement of output and production in the United States was changed from GNP to GDP. Most other nations already used GDP, and this change reflected the increasing interdependence of the world’s economies.
• Price indexes are used to measure price changes in the economy; they are used to compare the prices of a given “bundle” or “market basket” of goods and services in one year with the prices of the same “bundle” or “market basket” in another year.
• A price index has a base year, and the price level in that year is given an index number of 100; the price level in all other years is expressed as a percentage of the price level in the base year.
• Price index number = Current year prices/Base year prices x 100.
• The most frequently used price indexes are the GDP Price Deflator, the Consumer Price Index (CPI), and the Producer Price Index (PPI).
• Real GDP is adjusted for price changes; nominal GDP is not adjusted for price changes.
• Inflation is a general increase in the overall price level.
• Savers, lenders, and people on fixed incomes generally are hurt by unanticipated inflation; borrowers gain from unanticipated inflation.
• Unemployment occurs when people who are willing and able to work cannot find jobs at satisfactory wage rates.
• Unemployment is classified into four categories: frictional, cyclical, structural, and seasonal.
• The unemployment rate represents the percentage of the labor force that cannot find work on acceptable terms.
• Full employment is not defined to mean zero unemployment. Frictional and structural unemployment exist even with zero cyclical unemployment.
• A business cycle measures the ups and downs of economic activity over a period of years.
• The phases of the business cycle are expansion, the peak, contraction, and trough
• Macroeconomics is the study of the economy as a whole; microeconomics is the study of individual parts of the economy such as businesses, households, and prices. Macroeconomics looks at the forest, microeconomics at the trees.
• A circular-flow diagram illustrates the major flows of goods and services, resources, and money in an economy. It shows how changes in those flows can alter the level of goods and services, employment, and income.
• Gross Domestic Product (GDP) is the market value of all final goods and services produced in a nation in one year; it is the most important measurement of production and output.
• GDP counts only final goods and services; it does not count intermediate goods and services.
• GDP also does not count second hand goods; the buying and selling of stocks and bonds; and transfer payments such as social security benefits, unemployment compensation, and certain interest payments.
• GDP includes profits earned by foreign-owned businesses and income earned by foreigners in the United States, but it excluded profits earned by U.S.-owned companies overseas and income earned by U.S. citizens working abroad.
• GDP is most easily calculated in two ways; (1) add all the consumption, investment, and government expenditures plus net exports; and (2) add all the incomes received by owners of productive resources in the economy.
• Gross National Product (GNP) includes profits earned by U.S.-owned companies overseas and income earned y U.S. citizens working abroad, but it does not include profits earned by foreign-owned companies in the United States or income earned by foreigners working in this country.
• Other measures derived from national income accounting measures include Net National Product (NNP), National Income (NI), Personal Income (PI), and Disposable Personal Income (DPI).
• In 1991, the basic measurement of output and production in the United States was changed from GNP to GDP. Most other nations already used GDP, and this change reflected the increasing interdependence of the world’s economies.
• Price indexes are used to measure price changes in the economy; they are used to compare the prices of a given “bundle” or “market basket” of goods and services in one year with the prices of the same “bundle” or “market basket” in another year.
• A price index has a base year, and the price level in that year is given an index number of 100; the price level in all other years is expressed as a percentage of the price level in the base year.
• Price index number = Current year prices/Base year prices x 100.
• The most frequently used price indexes are the GDP Price Deflator, the Consumer Price Index (CPI), and the Producer Price Index (PPI).
• Real GDP is adjusted for price changes; nominal GDP is not adjusted for price changes.
• Inflation is a general increase in the overall price level.
• Savers, lenders, and people on fixed incomes generally are hurt by unanticipated inflation; borrowers gain from unanticipated inflation.
• Unemployment occurs when people who are willing and able to work cannot find jobs at satisfactory wage rates.
• Unemployment is classified into four categories: frictional, cyclical, structural, and seasonal.
• The unemployment rate represents the percentage of the labor force that cannot find work on acceptable terms.
• Full employment is not defined to mean zero unemployment. Frictional and structural unemployment exist even with zero cyclical unemployment.
• A business cycle measures the ups and downs of economic activity over a period of years.
• The phases of the business cycle are expansion, the peak, contraction, and trough
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