Topic: Measures of Economic Activity - Calculating GDP; Calculating nominal GDP using expenditure apporach; Calculating GNP/GNI; Calculating real GDP using a price index deflator; Understanding the difference between nominal and real GDP; Understanding how the GDP deflator is derived; Unsing the GDP deflator to calculate real GDP

Objectives & Outcomes

Students will be able to calculate nominal GDP using the expenditure apporach.

Students will be able to calculate GNP/GNI.

Students will be able to calculate real GDP using a price index deflator.

Students will be able to understand the difference between nominal and real GDP.

Students will be able to understand how the GDP deflator is derived.

Students will be able to use the GDP deflator to calculate real GDP.

Materials:

Calculator

Handout on GDP calculations

GDP data (either from the internet or from a textbook)

Warm-Up

Have students work in pairs to complete the following prompt:

According to the GDP concept, total economic activity in a country can be measured by ____.

Discuss the answers as a class.

Direct Instruction

Start by introducing the concept of GDP, and its importance in measuring economic activity.

Discuss the two different approaches to calculating GDP: the expenditure approach and the income approach.

Explain the differences between nominal GDP and real GDP, and the importance of using a price index deflator to calculate real GDP.

Demonstrate how to use the GDP deflator to calculate real GDP.

Guided Practice

Provide students with handouts containing information about different countries' GDP and the corresponding price index deflators.

Have students work in pairs to calculate the real GDP for each country using the price index deflator.

Have pairs share their results and discuss the differences in real GDP across countries.

Encourage students to hypothesize about the reasons behind these differences.

Independent Practice

Have students work in small groups to research the price index deflators for a selection of goods and services in their own country.

Have each group create a poster or presentation that shows the price index deflator for different goods and services and explains the -methodology used to derive the deflator.

Have each group present their findings to the class.

Closure

Review the four steps for calculating real GDP using a price index deflator.

Ask students to explain the difference between nominal and real GDP and how the GDP deflator is used to calculate real GDP.

Assessment

Have students turn in their completed worksheets as an assessment of their understanding of calculating real GDP using a price index deflator.

Have students turn in the completed calculation of real GDP for the US economy from 2005-2015 and discuss their answers as a form of assessment.

Have students complete a short quiz reviewing the four steps for calculating real GDP and the difference between nominal and real GDP using a price index deflator.

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