Subject:
Economics
Material Type:
Module
Level:
Community College / Lower Division, College / Upper Division
Provider:
Ohio Open Ed Collaborative
Tags:
Macroeconomics
License:
Creative Commons Attribution Non-Commercial
Language:
English
Media Formats:
eBook, Text/HTML

GDP - Gross Domestic Product: Course Map & Recommended Resources

Overview

Looks at the flow of income in the economy and the calculation of GDP as well as other measures of national income. Discusses shortcomings of and improvements on the various measures.

Learning Objectives

  1. Understand basic macroeconomic terminology and concepts, including the distinction between real and nominal magnitudes (2)
  2. Understand the national income accounts (3)

NOTE: This Module meets Ohio TAG's 1, 2 for an Intro to Macroeconomics Course

Learning Goals:

  1. GDP versus other measures of output
  2. Total output as measured by the expenditure and income approaches
  3. Flow of money in the economy, Gross Domestic Product; real and nominal (with deflator)

Recommended Textbook Resources

Supplemental Content/Alternative Resources

Alternative OER Text

Principles of Macroeconomics: Chapter 6 

 

Alternative sources, grouped by Learning goals

GDP versus other measures of output

  • Is GDP or GDI a better measure of output? A statistical approach

    • Paper from Bureau of Economic Analysis comparing usefulness of GDP and GDI over time.
    • Authored by: Ryan Greenaway-McGrevy (2011).
  • Research of Michael T. Owyang
  • Better Measure of Output: GDP or GDI?
    • Compares Gross Domestic Product and Gross Domestic Income.
    • Authored by: Michael and Hannah Shell (2016). Provided by: Federal Reserve Bank of St. Louis.
  • Beyond GDP
    • Article on International Commission on the Measurement of Economic Performance and Social Progress, a link to SoundCloud podcast on the limits of GDP by Diane Coyle and report on countries that have adopted “Wellbeing Economy Alliance”.
    • Authored by: Joseph Stiglitz (2018). Provided by: Project Syndicate.
  • The Lockup
    • Includes active learning activity corresponding to Rittenberg text.
    • Authored by: Libby Rittenberg (2011).
  • Five Measures of Growth that are Better than GDP
    • Article by World Economic Forum about other measures that might do a better job of assessing the economic health of a country.
    • Authored by: Stewart Wallis (2006).

Total output as measured by the expenditure and income approaches

Flow of money in economy, Gross Domestic Product; real, and nominal (with deflator)

 

Non-open access texts

Principles of Economics, Twelfth Edition

  • Authored by: Karl E. Case, Ray C. Fair and Sharon M. Oster (2017). Provided by: Pearson Publishing.

Macroeconomics, Twelfth Edition

  • Authored by: Robert J. Gordon (2012). Provided by: Pearson Publishing.

Economics, Fourth Edition

  • Authored by: Joseph E. Stiglitz (2007). 

Topic Active Learning Exercise

To the student: You have been hired to think seriously about whether the GDP measure is the correct one for determining the health of the economy. To begin this project, you revisit a famous speech by Robert Kennedy from 1968.

Step 1: Listen to the speech by Robert Kennedy about what is lacking in the way we measure economic health. (He speaks of GNP, but the same arguments apply to GDP.)

  • Robert Kennedy Speech

    • Video containing speech by Robert Kennedy about problems with using GDP as a measure of well being
  • Transcript

    • Transcript of speech by Robert Kennedy about problems with using GDP as a measure of well being (you need to scroll down the page a bit to get to the actual speech.)

Step 2: As a group, devise a different way to measure economic health, other than GDP (or GNP). Your approach should address the following issues, and, as you write your report, you should explain how they are included.

  1. How will you summarize the health of the economy? What aggregate numbers will you use as part of your assessment?

  2. What is the biggest reason this approach is better than the current use of GDP?

  3. What is included in your approach that is not included in the measure of GDP?

  4. Why does including this improve your measure, in relation to GDP?

  5. What is not included in your approach that is included in the measure of GDP?

  6. Why does not including this improve your measure, in relation to GDP?

  7. If you were the poorest person in an economy, would your well-being be considered in calculating this measure? How?

  8. If you were the richest person in an economy, would your well-being be considered in calculating this measure? How?

  9. Are there any groups in the economy that may feel that their well-being is not being considered in calculating this measure? Who and why?

  10. Do you think that you can get this measure approved by the government and by other governments worldwide? What would be necessary to make this happen?

Possible grading rubric for Active Learning Exercise: possible 10 points for each answer.

Active Learning Exercise

FAQS about FRED

Some general links that will help with FRED:

1. What is FRED, and how do I get into it?

  • “FRED” stands for “Federal Reserve Economic Data” and is a collection of publicly available data maintained by the Federal Reserve Board of St. Louis.
  • FRED may be accessed at FRED. Upon entering the web site, either create a password (“register”) or use an already created password (“sign in”). The links to do this are found in the upper right-hand corner of the page.

2. How do I create a graph from a data set I am interested in using?

  • To find a data set, search using a keyword, and then select the appropriate data set from the list that appears. (Be sure to pay attention to which years are available for use. A companion collection of historical data is also available for earlier years.)
  • Upon selecting a data set, a graph of that data will appear on your screen.

3. How do I change the years covered by a graph?

  • Above your graph will be two spaces indicating the years that the graph is illustrating.
  • To change a year, click on the appropriate box and move the cursor through possible years until the correct one appears. Once in a year, select the appropriate month for that year.
  • Change the Time Range

4. How do I change the type of graph?

  • Go to “Format” and change the type of graph to the one desired. For example, you can create a scatter plot or a line graph using this dialogue box.

5. How do I create a two-dimensional graph?

  • Go to “edit graph” and you will be able to add a variable to your graph.
  • The first variable entered will become the variable on the vertical axis, while the second will be the variable on the horizontal axis. If you want to, you can in “Format” when editing the graph.
  • Customize Data, Add Series to Existing Line

6. How do I change a graph?

  • Once a graph is created, go to “edit graph” to make changes. In this dialogue box, you can make many changes. Some possible changes include adding more variables, changing which variable appears on the horizontal or vertical axis, changing the type of graph, and changing the dimensions of the graph.
  • Format the Graph and Line Settings

7. How do I save a graph?

  • In FRED, with your graph on the page, go to “Account tools” and click on “Save Graph”. This will bring up a dialogue box that will allow you to name your graph.
  • Save Your Graphs

8. How do I download data into a spreadsheet?

  • With the graph on the page, go to the “Download” button in the upper right hand corner of the page. Once there, select “CSV” from the options, and the data will soon appear in a spreadsheet.
  • Downloading Data from FRED

9. How do I do statistics with my data?

  • Use the statistical tools from CSV or Excel to do statistical analysis. You may need to upload a supplementary tool to allow you to do more advanced statistics, such as some types of regressions.

  10. How do I calculate a correlation coefficient in CSV?

  • To calculate a correlation coefficient in CSV, download your data and open as a spreadsheet. Once in the data, click on “Data”.
  • An option will appear on the upper right hand side that says “Data analysis”. Click on this, and a list of possible statistical options will appear. Click on “correlation”.
  • Once in “correlation”, highlight the part of your data set that you want to use to calculate a correlation coefficient (you may need to move columns around to be able to do this.) As you highlight the correct rows and columns (be sure you are calculating the coefficient for the correct parameter; either “rows” or “columns”), the labels for these spaces will appear in the dialogue box. Once they are correct, click on “ok”. A correlation coefficient will appear on the spreadsheet.
  • The  correlation coefficient, “r” is a numerical value that summarizes that relationship between two variables. Values close to 1 and negative 1 indicate a strong relationship, while values close to zero indicate very little relationship between two variables.
  • Calculating Correlation Coefficient R (Video)

11. How do I share graphs?

  • Go to “share links” and click on “paper short URL” to have the program create a shareable URL link for your graph.
  • Share my FRED Graph

12.  How do I re-access graphs I have created?

  • Go to “Account tools” and select “My Account” The graphs you have saved will appear, along with a notation as to when they were created.

 

Works cited in “FAQS about FRED”

Federal Reserve Board of St. Louis. “FRED: Economic Research” Retrieved on October 27, 2018 from https://fred.stlouisfed.org/.

Federal Reserve Board of St. Louis. “FRED: Master 10 tools in 10 minutes” Retrieved on October 27, 2018 from https://news.research.stlouisfed.org/2016/01/fred-master-10-tool-in-10-minutes/

Federal Reserve Board of St. Louis. “Frequently Asked Questions”  Retrieved on October 27, 2018 from https://fredhelp.stlouisfed.org/#fred-faq-frequently-asked-questions.

Federal Reserve Board of St. Louis. “Getting to Know FRED: Changing the Time Range” Retrieved on October 27, 2018 from https://fredhelp.stlouisfed.org/fred/graphs/customize-a-fred-graph/change-graph-time-range/

Federal Reserve Board of St. Louis. “Getting to Know FRED: Customize Data, Add Series to Existing Line.” Retrieved on October 27, 2018 from https://fredhelp.stlouisfed.org/fred/graphs/customize-a-fred-graph/data-transformation-add-series-to-existing-line/

Federal Reserve Board of St. Louis. “Getting to Know FRED: Downloading Data from FRED” Retrieved on October 27, 2018 from https://fredhelp.stlouisfed.org/fred/data/downloading/using-the-download-data-link/

Federal Reserve Board of St. Louis. “Getting to Know Fred: Save Your Graphs” Retrieved from https://fredhelp.stlouisfed.org/fred/account/fred-account-features/save/

Federal Reserve Board of St. Louis. “How can I find Data on FRED?” Retrieved on October 27, 2018 from https://fredhelp.stlouisfed.org/#fred-data-how-can-i-find-data-on-fred

Federal Reserve Board of St. Louis. “Getting to Know FRED: How Can I Share My FRED Graph?” Retrieved on  October 27, 2018 from https://fredhelp.stlouisfed.org/category/fred/graphs/share-my-fred-graph/

Kahn, Sal. “Calculating Correlation Coefficient r (video with text)” Retrieved on October 27, 2018 from https://www.khanacademy.org/math/ap-statistics/bivariate-data-ap/correlation-coefficient-r/v/cal