Name _______________________________________________________________ Intro to Macro

Part 1: Practice- Put a check mark in the box if the expenditure is counted for United
States GDP. If it
is, indicate the correct category in the blank; if it is not, indicate why not.

❏ 1. _______NO_________ You volunteer for 50 hours this month at a local

soup kitchen
❏ 2. ________Yes, Con________ Katie sells tomatoes at the local farmers market

❏ 3. _____NO___________ Sarah grows apples in her backyard and bakes her

kids an apple pie
❏ 4. _______NO_________ An accountant does her own taxes
❏ 5. ______NO__________ A Social Security check from the government to a
retired steelworker
❏ 6. ______Yes, Gov__________The federal government purchases $1 billion
worth of smart bombs
❏ 7. _______Yes, Con_________ Teddy pays a divorce attorney for his services
❏ 8. ________NO________ A grandmother spends 8 hours a day caring for her
grandchildren
❏ 9. _______Yes, Con_________ Becky buys Taylor Swift tickets from a guy in
the arena parking lot
❏ 10. _______Yes, Con________ An insurance company pays $30,000 for a
patient’s chemotherapy
❏ 11. _____NO__________ College students buy used textbooks for their
courses
❏ 12. ______Yes, BI_________ A hairdresser pays an accountant $200 to
complete her tax returns
❏ 13. _____Yes, Con__________ Jerry purchases two packs of cigarettes a day
❏ 14. ______NO_________ A mother cooks meals, cleans the house, and tutors
her sons
Part 2: Stretch Your Thinking – Consider the following quote and answer the
questions.
“[GDP] counts special locks for our doors and the jails for the people who break them. It
counts the destruction of the redwood and the loss of our natural wonder in chaotic
sprawl. It
counts napalm and counts nuclear warheads and armored cars for the police to fight the
riots in
our cities...
Yet the [GDP] does not allow for the health of our children, the quality of their
education or
the joy of their play. It does not include the beauty of our poetry or the strength of our
marriages,
the intelligence of our public debate or the integrity of our public officials.
It measures neither our wit nor our courage, neither our wisdom nor our learning, neither
our
compassion nor our devotion to our country, it measures everything in short, except that
which
makes life worthwhile.”
--Robert F. Kennedy, March 18, 1968

15. Explain the limitations of using GDP to measure the true standard of living in a
country.

Because does not measure health, education, equality of opportunity, the state of the
environment, it is not good for measuring quality of life

16. Some economists have suggested incorporating a measurement of happiness into

GPD. Identify
two specific measurements that could be used to capture happiness in GDP.

Two measurement that can be used would be social support and helthy life expectancy.

17. Based on your knowledge of American history, describe a time when GDP provided a
misleading
view regarding the actual living conditions for individuals or groups in the US.

In 2010 after the recession, GDP provided a misleading view of the economic growth and living
conditions in the US. Of course, certain parts of the US we affected differently but mainly
because of the real vs normative GDP; it gave a false impression.

18. Which decade would you most prefer to live in: 1930s, 1940s, 1950s, 1960s, 1970s,
1980s, or
1990s?
Explain your reasoning. I would pick the 1990s, as an afro-carib immigrant I think going
any further back in time could put me at a safety risk, especially in Florida.