There are three ways of calculating GDP - all of which in theory should sum to the same amount: National ... Only those incomes that are come from the production of goods and services are included in the calculation of GDP by the income approach. We
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Idea Transcript
Counting GDP Diane Keenan and Mark Maier from Economics Live! Learning Economics the Collaborative Way Author Profile This material is replicated on a number of sites as part of the SERC Pedagogic Service Project Summary Working in a small group, students determine whether items listed on 18 cards are counted in GDP (and in which category) or whether they are not counted (and why.)
Learning Goals National income accounting
Context for Use Appropriate for introductory macroeconomics course
Description and Teaching Materials Distribute one packet of the 18 cards (see link below) to each group. Ask students to keep the packet upside down and to take turns selecting one card.Distribute one copy of the worksheet to each student. The student selecting the card reads it to teammates who must determine if the item is included in GDP (or not) and in which category (or why it is excluded.) When the group agrees, answers are entered on the worksheet (see link below). Students continue until all 18 cards are used.
Activity cards (Acrobat (PDF) 454kB Aug15 12)
Worksheet (Acrobat (PDF) 37kB Aug15 12)
Teaching Notes and Tips This activity is designed to encourage student-to-student discussion about national income accounting. Although students may focus on correct answers and an accurate total at the end, it is their reasoning that matters if the concepts are to be used in future contexts. The goal is to help students understand the concepts that lie behind national income accounting: why are the categories C, I, G and net exports important? and why it is important that some transactions are not counted? The advantage of using the cards is that they slow students down and require each student to be involved. In monitoring the small group work, make certain that students take turns reading the cards and that students don't move on to the next card until everyone agrees with the group's choice. Some of the items may be allocated in more than one category. Tell student that this is okay. Remind students to enter cards by number on the worksheet; the cards will appear at random #1 through # 18
Assessment After completing the small group activity, call on students at random to explain why a card was allocated to a particular category. (A quick way to call on random students is to ask each group to designate a spokesperson based on readily identified characteristics such as age, height, number of siblings, nearest birthday. Then call on groups one by one for answers.) Name other goods or services and ask students to allocate them as in this activity, or ask students to make up these examples.
References and Resources For detailed explanation of national income accounting see U.S. Department of Commerce, Bureau of Economic Analysis