GDP Worksheet
Name/Block; ___________________
1. This worksheet is to help with the understanding of GDP, how it's calculated, what is and isn't included, and give
students some hands-on experience with data from the Federal Reserve Economic Data collection.
2. It is important to know that the growth rate is calculated by the percentage change in real GDP over a certain
time period.
3. If you’re not sure how to calculate percentage change- try googling it.
Student Alert******* Aggregate output is another name for GDP. You may see or hear it referred to as output,
economic output, or aggregate output.
Part 1: What is included and excluded in GDP. What is GDP?
1. The four main components of GDP are:
______________ ___________________ ______________ ______________
2. The basic equation for GDP is Y =____ + ____ + _____ + ____
3. What is the biggest component of GDP? ______________________
Part II: What’s not in GDP?
Use the mnemonic IFIFU to help remember what is not in GDP. Intermediate goods, Financial assets and
transfer payments, Inputs, Foreign produced goods and services, Used goods.
A drawback and negative aspect of GDP calculations is that it is difficult to include a few things. One of them being the
Underground economy --remember the black markets we spoke about in class regarding price floors and price ceilings.
For homework you will listen to a Freakonomics Radio podcast and answer some basic questions. See below.
http://www.freakonomics.com/2012/08/30/how-deep-is-the-shadow-economy-a-new-freakonomicsradio-podcast/
and answer the following questions:
1. What is the Shadow Economy and how does it impact GDP?
2. Give examples from the podcast to support your assertions.
3. What is the number given for how many dollars in the world that is part of the shadow economy?
4. Why is the GDP rate of 40-70% in countries like Egypt so high compared to the 9% in the US?
5. What is the relationship between the activity in the shadow economy and a recession? Does it differ depending
on the country?
6. Are there costs to society, other than the lost tax revenue, of the shady economy?
Part III: Is GDP a good measure of a country’s standard of living? Why or why not?
Part IV: Real GDP vs. GDP
1. Why is Real GDP the better measure of a country’s output?
2. Both GDP and Real GDP are just statistical measures. They are positive not normative. One cannot
measure happiness, a nation’s self-esteem, or well-being. Why is this?
3. Why is GDP per capita the measure used to compare standard of living between countries?
4. http://bigthink.com/strange-maps/131-us-states-renamed-for-countries-with-similar-gdps.
What surprises you?
Student Alert: When you hear media reports on the latest GDP numbers, you are hearing the value of
current production in the nation at current prices (dollars). This can be misleading if you hear that the
GDP in the US is twice that of another nation and assume that means the US economy is twice as bigyou are not comparing apples to apples.
Group work: With a chrome book and in your group.
Go to the following website http://www.indexq.org/economy/gdp.php
Data lags about 1 to 2 years so you are looking at data probably from 2014. Look at the country you are
assigned.