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ECONOMICS YEAR 11: WEEK 2 Primary – Cattle farmed OUTPUTS AND INCOME FLOWS Receives Money Receives Money Secondary – Hides manufactured into shoes Receives Money Tertiary – Shoes sold in shops How can one calculate total value of the goods and services (aggregate output) from the 3 sectors?
NATIONAL INCOME ACCOUNTING Measuring National Income Skills & Keywords Skills: Analysis and Evaluation Keywords: intermediate goods, final goods, double counting, capital consumption allowance (depreciation), GDP, GNP, nominal GDP, real GDP • Objective:At the end of the lesson: • All learners will be able to describe income, output and expenditure measures of the national income • Most learners will be able to explain gross domestic product (GDP) and gross national product (GNP)as a measure of economic growth • Some learners will be able to explain the difference between nominal and real GDP
DO NOW and STARTER ACTIVITIES Do Now Starter Draw a bar chart to show the value of the GDP of the countries. Explain why these figures differ. • Research on the GDP of the following countries for the same year: Nigeria Ghana Switzerland Croatia England Bangladesh
MAIN TEACHING ACTIVITY Teacher Activity Teacher Activity • How did the countries shown calculate these values? National output (NO) is the measure of total market value of all final goods and services. National expenditure (NE) is the measure of total expenditure on final goods and services National income (NI) is the measure of households’ total income
MAIN TEACHING ACTIVITY Teacher Activity Contd. Learner activity You may discuss with someone the following: How does GDP differ from GNP? What goods and services do you think would be excluded from a country’s GDP? What happens to the figures of the GDP of the countries in the DO NOW activity if there are different price levels (as they usually are)? • GNP, on the other hand, measures the value of final goods and services ofa country’s enterprises and citizens GNP is useful in analysing economic situations relating to income of residents and their investment behaviours.
PLENARY • Teach this topic to someone and ask them to test your understanding with these questions: • Why is the GDP usually calculated by using at least 2 approaches. • Which of the three approaches is the best method?
HOMEWORK • What is the difference between intermediate goods and final goods. Illustrate your answer with examples (4 marks). • Differentiate nominal GDP from real GDP (2 marks). • If total demand in an economy rises, what happens to (i) price level (ii) nominal GDP, and (iii) real GDP (4 marks)
HOMEWORK (Extension) The national accounts of country Y contain the following information: • Gross Domestic Product £52 000 million • Depreciation £7 000 million • Net income from abroad £3 000 million Use the information to calculate country Y’s, • Gross National Product (2 marks) • If country Y’s population was 20 million, calculate the country’s GNP per capita (3 marks)
Success Criteria for Homework • 1. Sound distinction- 2 marks. Examples - 2 marks Reasonable distinction – 1 mark • 2. Sound distinction- 2 marks. Reasonable distinction – 1 mark • 3 (i) and (ii) -1 mark for stating a reason. (iii) 2 marks. Total maximum mark – 10 marks Due date – 22nd September, 2014. Enquiries: firstname.lastname@example.org If you can attempt the extension exercise, please do so and submit too. (a) method– 1 mark, correct answer – 1 mark (b) method – 2 marks, correct answer – 1 mark.