Unit 2: Macroeconomics: Goals, Measures, and Challenges
In macroeconomics we study the total output an economy generates. Economists use gross domestic product (GDP), the monetary value of all final goods and services produced within a country's borders in one year, to measure a country's total output. Macroeconomics tend to use real GDP, rather than nominal GDP, for their comparisons since real GDP removes the effect of inflation. Measuring growth in current dollars (which does not account for inflation), rather than constant dollars, might indicate a false sense of economic growth or decline.
Governments focus on three key indicators of economic growth: an increase in real GDP over time, full employment, and price level stability. In unit 5, we explore how governments form, implement, and evaluate their fiscal and monetary policies to achieve these three goals. In this unit we uncover scenarios and philosophical debates about government's role in a market-based economy. We examine whether GDP is an accurate measure of societal well-being, quality of life, and the standard of living.
Completing this unit should take you approximately 5 hours.
2.1: Rationale for GDP: A Monetary Measure
2.2: Avoidance of Double Counting
2.3: Calculating GDP: Expenditure and Income Approaches
2.4: Calculating Nominal GDP vs. Real GDP
2.5: Problems Using GDP as a Measure of Well-Being
Unit 2 Discussion and Assessment