Standards for Gross Domestic Product Video and Quiz

Standard: 11

Name: Gross Domestic Product (GDP)

(GDP) Gross domestic product, the market value of the final goods and services produced in an economy, is the most commonly used measure of the size of the economy. Because a dollar spent is a dollar earned, GDP equals the total income for the nation.

• 6-8: At the middle school level, gross domestic product is defined and described with the caveat that it does not capture illicit and nonmarket transactions.
• 9-12: At the high school level, students are introduced to the difference between nominal and real GDP. Further limitations of real GDP as well as real GDP per capita are presented. Finally, the concept of what determines GDP in the long run is discussed.Benchmark Students will know that: Students will use this knowledge to: 11.M.1 Gross domestic product (GDP) is a measure of a nation’s economic output. It measures the total market value of all final goods and services produced in a country during some period of time, typically a year.Explain why tires produced by a domestic tire manufacturer are not counted as part of GDP when they are sold to a domestic producer of automobiles, but are counted when they are sold to domestic consumers for their family cars. 11.M.2 GDP can be computed by summing household consumption spending; investment expenditures; purchases by federal, state, and local governments; and net exports.Explain what is included in each component of GDP, and give examples. Explain why imports are subtracted in calculating GDP. 11.M.3 GDP also measures the total income earned in an economy, because when something is bought, the amount of the expenditure becomes income for the resources used to make the good.Explain how the money spent on a consumer purchase, such as a latte at a coffee shop, is distributed as income among the various resources involved in producing and serving the latte. 11.M.4 GDP per capita is GDP divided by the population of a country. It is the average income per person in an economy for a period of time.Explain how two countries with similar GDPs can have drastically different GDP per capita. Identify other countries whose GDP per capita is similar to, less than, and greater than that of the United States. 11.M.5 GDP does not always perfectly capture all production in the economy because it does not capture nonmarket or illicit market economic activities.Contrast a nonmarket activity such as stay-at-home caregiver for a child/elderly parent with a market activity such as using a daycare or nursing home to provide care. Explain why they end up being accounted for differently in GDP.M: MIDDLE SCHOOL STUDENTS National Content Standards in K–12 Economics | 43 Standard 11: Gross Domestic Product (GDP)