Closing the Gap

In this economics lesson, students will identify factors affecting GDP in different countries.

Warm-Up

Tell students that this lesson will focus on differences in the level of wealth in countries around the world. Divide the class into three groups. Group 1 should have two students, Group 2 should have five to eight students, and the remainder of the class is in Group 3. Print and distribute copies of the class money as follows: Group 1 receives $10; Group 2 receives $16 and Group 3 receives $20. (Note: You may choose to use candy, pencils or other good instead of the money for this assignment but you need to maintain similar numbers of products.) Have each group select a person to allocate the money to other group members. Tell them they have 60 seconds to select their decision-maker and divide the money in their individual groups with the following numbers: Group 1 – two students, Group 2 – five to eight students, Group 3 – the rest of the class. Conclude the activity at the end of 60 seconds and ask the following questions: 1. How was the money distributed in your group? (Answers will vary.) 2. What were some other ways you could have done it? (Answers will vary; possible answers include one person could have kept it, distributed equally, distributed by merit, distributed by contest, etc.) 3. Which group had the most money overall? (Answer is Group 3). 4. Does everyone in Group 3 feel wealthy, especially when compared to Group 1? (Most should answer no.) Explain that this brief simulation is an example of using the concept of Real GDP per capita to compare countries.

Modeling

Remind students that GDP is the movement of output and income from one sector of the economy to another, and it is used to measure the market value of all the finished goods and services produced within a country’s borders in a specific time period. Also remind students that Real GDP is measured in dollars of constant purchasing power, meaning it has been adjusted for a country’s rate of inflation. Real GD is used to measure economic growth because it better reflects country’s level of production. Explain that they will be using Real GPD to compare countries’ standards of living and economic growth. Tell them they were “given” money in the previous activity, but that is not how it works in a country. Ask them to identify ways that countries actually get money in their economy. (Individuals, businesses, and governments produce and sell goods and services domestically and internationally, which is the economic activity in their GDP). Remind students that it is not always useful to compare countries simply based on their GDP. Population differences, price changes, lifestyle preferences, and other factors can influence what is known as a country’s standard of living. Explain that standard of living is defined as the level of subsistence of a nation, social class or individual with reference to the adequacy of necessities and comforts of daily life – meaning it is a measure of the wealth, comfort, and access to necessities within a country or region. Point out that there is no precise measure for standard of living, but economists consider Real GDP per Capita as the best measure. Ask students to describe this term (Real GDP per person) and why is it would be a good measure of wealth in a country (it reflects the average level of output and wealth within a country, not the social differences.) Tell students they will be viewing the Dollar Street web site which displays housing in various countries around the world. (Note: Be sure to click on “Homes” in the first box and “The World” in the second box for this activity. The dollar amount in each box represents the monthly income of the family living in that particular home.) Begin scrolling through the different countries and discussing the pictures. Tell students to focus on the following questions: What do the pictures indicate about the standard of living in that country? What do the houses have in common? How do they differ? Does anything shown here look like your neighborhood? What would be some of the challenges or hardships facing the families? How would they be the same or differ? What surprises you about the differences in living conditions? How would that impact the potential quality of life, productivity and economic growth in their country? Summarize this activity by answering student questions, reminding them that real GDP per capita varies greatly from one country to another and is one measure of a nation’s standard of living.

Group Activity

Tell students they will now be completing another activity that illustrates the differences in GDP per capita. Put students in small groups and distribute one set of the GDP: It’s a Match activity. Explain that you have compiled some data one a few countries and they need to work in their groups to create a table matching the country, its population, its 2018 GDP and its 2018 GDP per capita. Review student answers. Have each group write down three things that surprised them and share their answers with the rest of the class. Discuss any questions that students may have to debrief the activity.

Individual Activity

Remind students that countries collect a variety of data to learn more about their economy. Tell them this activity will help them understand the factors contributing to a nation’s GDP per capita. Distribute copies of the Analyzing the Data worksheet and the GDP Data File to each student. (Note: You may choose to have students access the data file on their laptops or other devices to complete this activity. You may also choose to have students work in pairs to complete the assignment.) Explain that they need to use the information in the data file to complete the assignment. Allow sufficient time for students to complete the assignment, then discuss their answers. Ask student what conclusions they can draw from this assignment. Answers should note that investments in technology/infrastructure, human health and capital, along with economic freedom have a strong, direct correlation with higher GDP per capita.

Have students write a short paragraph explaining two things they learned from this lesson and one thing a country could do to increase its GDP per capita.

Activity 1

Put students into small groups. Assign each group a country and have them use the Dollar Street web site to compile a PowerPoint presentation on life in that country. Be sure they address the economic concepts presented in this lesson that relate to the country’s economic growth and standard of living.

Gapminder Dollar Street

It’s a Match

Data File

Analyzing GDP Data

Analyzing GDP Data Answer Key