- Referring to Figure 14.3 above, explain what is occurring in the years 2008-2010 and then in 2005-2007 in terms of real GDP and potential.
- From 2010 onward it appears that US real GDP is recovering. After referring to Figure 14.3 once again, what conclusion might you make about this recovery especially in terms of potential GDP?
- How would you define a ‘recession’?
- Explain why economists termed the period following 1991 as the Great Moderation.
- Real GDP does not include all goods and services produced. Explain.
- The United Nations has constructed a Human Development Index (HDI). What does this index measure?
- Where does the United States rank using the United Nation’s HDI?
- Why isn’t the US ranked highest since it has one of the highest GDP’s per person in the world?
- If GDP increased and the unemployment rate decreased, what phase of the business cycle would you assume the economy is in?
- When exactly do economists say that an economic expansion ends and a recession begins? When does a recession end?
- Robert Kennedy, when seeking the Democratic presidential nomination in 1968, remarked that GDP measures everything except that which makes life worthwhile. What do you think he meant by this statement? What do you think he feels is missing when measuring GDP.
- Do you feel that economists are guilty of discrimination when they don’t count the long hours a stay at home mother or father spends raising a family?
- Table 14.4 in your text (pg. 383) compares real GDP per person in the US between 1960 and 2016. This shows real GDP per person in 2013 at almost 3 times that of 1960. Does that mean that people in the US are 3 times happier in 2013 as compared to 1960?
- During the 1960’s the potential growth rate of GDP grew at an average of 20.8% per year. Since 1970 though, the growth rate of a potential of GDP has been about 1.9% a year (pg. 383 bottoms). Using this as a gauge explain why you think the US economy is either better or worse off today than it was 50 years ago.
- If underground production esp. the production and sale of illegal drugs were counted in GDP, it would have made up about 16% of GDP; a huge amount. Explain why you feel that economists and the government do not count these goods as part of GDP.
- Even though the per person real GDP in the US is among the highest in the world, explain why you feel that this may be misleading in terms of the quality of life for individuals in the US (think leisure, environment, health, social justice etc.).
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