Sep 30 2011

Lesson Plan: Macroeconomic Indicators around the World

Directions: Macroeconomics is an area of study with precise goals attached to it. Macroeconomists generally agree that there are three primary goals towards which policies should be used to try and achieve:

  • Full employment of the nation’s resources, including labor, land and capital.
  • Price level stability, meaning a low (generally between 2% and 4%) inflation rates
  • Economic growth, meaning a year on year increase in the nation’s output of goods and services and the average income of the nation’s people.

Understanding the indicators used in macroeconomics to measure the success in these three areas is important. In the activity that follows, you will research, define, and explain the various types of inflation, unemployment and economic growth. You will also research and record examples of these indicators from several countries. Finally, you will investigate your OWN country, and determine what precisely makes up the total amount of economic activity in your country.

 

Part 1: Using your notes and your textbook (Welker’s chapters 11, 12, 13, 14 and 15), answer the following questions. Most of the country data you are asked to find can be found in the CIA World Factbook.

Define and explain the various types of each of the following:

  1. Define inflation [2 marks]
    1. Type 1 [1 mark]:
    2. Type 2 [1 mark]:
    3. Research and identify the current inflation rates in [3 marks]:
      • Switzerland
      • China
      • United States
  2. Define unemployment [2 marks]
    1. Type 1 [1 mark]:
    2. Type 2 [1 mark]:
    3. Type 3 [1 mark]:
    4. Research and identify the current unemployment rates in [3 marks]:
      • The UK
      • Germany
      • Spain
  3. Define Full Employment and Natural Rate of Unemployment [2 marks]
  4. Define economic growth and illustrate the concept of growth using a production possibilities curve [4 marks]
    1. Research and identify the most recent GDP growth rates in
      • Nigeria
      • Greece
      • Japan

Part 2:

  1. Identify the four components of a nation’s aggregate demand and briefly explain two factors that affect each of the four components (this can be found in Welker’s chapter 12) [10 marks]
  2. Research and identify the main macroeconomic indicators for your home country. Enter the information you find into THIS ONLINE FORM, and click submit when you’re done.
  • From the CIA World Factbook you should be able to discover your country’s main macroeconomic indicators (GDP, GDP per capita, inflation rate
  • Using the Eurostat website, you can find out what percentage of your country’s GDP is made up of government spending.
  • If you are not from a European country, you may have to do a little more investigation to find the percentage of GDP made up of government spending.

Part 3: The Results : You can view the results of the form by clicking HERE

Discussion Questions:

  1. Which of the countries appear to be doing the BEST job of meeting their macroeconomic objectives of low unemployment, low inflation and economic growth?
  2. Which countries appear to be doing the WORST at meeting their macroeconomic objectives?
  3. Which countries have the highest GDP growth rates? What do the highest growth countries have in common? What is different about them?
  4. Which countries have the lowest unemployment rates? What do these countries have in common?
  5. Which country experienced a recession in 2010? Discuss the possible relationship between economic growth and unemployment?

About the author:  Jason Welker teaches International Baccalaureate and Advanced Placement Economics at Zurich International School in Switzerland. In addition to publishing various online resources for economics students and teachers, Jason developed the online version of the Economics course for the IB and is has authored two Economics textbooks: Pearson Baccalaureate’s Economics for the IB Diploma and REA’s AP Macroeconomics Crash Course. Jason is a native of the Pacific Northwest of the United States, and is a passionate adventurer, who considers himself a skier / mountain biker who teaches Economics in his free time. He and his wife keep a ski chalet in the mountains of Northern Idaho, which now that they live in the Swiss Alps gets far too little use. Read more posts by this author

5 responses so far

5 Responses to “Lesson Plan: Macroeconomic Indicators around the World”

  1. Federico Lacuskyon 30 Nov 1999 at 1:00 am

    is pillow retarded?

  2. Angelaon 30 Mar 2010 at 12:22 pm

    I agree with the three goals of macroeconomists. I believe that a nation should exercise the full employment on goods. This will help the economy. The idea that inflation rates should be low is a good way to stay in the middle of the graph of inflation and recession. Every country should trade to increase the economies well being and the output of goods would increase.

  3. Cassion 06 Apr 2010 at 8:08 pm

    Employed workers includes paid employees, worked in their own buisiness, or worked as unpaid workers in a family member's business. This includes full and part time workers.To be counted as unemployed in the measurements one must be unemployed, were available for work, and had searched for a job during the previous four weeks. This also includes those that were laid off. Not in the labor force includes those who fit into neither of the first two categories (full-time student, retiree). The natural rate of unemployment is the normal rate of unemployment around which the unemployment rate fluctuates. In the U.S it is around 4%.

  4. Ericon 13 Apr 2010 at 1:51 am

    1. Consumer Spending

    2. Investment Spending

    3. Government Spending

    4. Net exports

    Consumer spending involves people buying new goods or services. And investment spending involves companies investing in capital goods.

  5. Drew Simoninion 14 Apr 2010 at 9:43 am

    The four components of AD is consumer spending, investment spending, government purchases and net exports (X-M). Investment spending is any kind of spending involving buying of capital goods and net exports is the countrys exports minus their imports.