Unit 1: Gross Domestic Product and Decisions Under Uncertainty
Gross Domestic Product (GDP) is the main measure economists use to explain how much an economy produces at any given time. Over time, trends can be identified and patterns of growth and contraction can be seen. Inflation, or the general rise of prices, affects how GDP is measured, and economists have to account for variations in measurement tools and approaches. No one measurement system or technique is most accurate all of the time. Different schools of thought consider how to calculate and interpret GDP from their own perspectives.
Decisions are often made with incomplete knowledge under shifting economic, political, and social conditions. Determining how best to estimate and compensate for uncertainty is a complex process; macroeconomists use mathematical techniques to approximate real-world choices and outcomes. Decisions under uncertainty draw on a variety of techniques, including game theory, statistical analysis, and calculus.
Completing this unit should take you approximately 17 hours.
Upon successful completion of this unit, you will be able to:
- explain the standard theory in macroeconomics at an intermediate level;
- explain and use the basic tools of macroeconomic theory, and apply them to help address problems in public policy;
- explain how inflation affects entire economic systems; and
- apply basic tools that are used in many fields of economics, including uncertainty, capital and investment, and economic growth.
1.1: Gross Domestic Product
Read Chapter 1 on pages 1–24 and 31–36. Think about how economists calculate GDP and take inflation into account. Consider different approaches to estimating GDP.
1.2: Trends and Cycles
Read Chapter 1 on pages 25–30. Think about the ways economists describe how trends and cycles emerge and change. Consider how different economic interpretations may impact decisions.
1.3 : Decisions Under Uncertainty
Read Chapter 3 on pages 63–75. Consider a time you had to make a decision under uncertain conditions. How did you approach it? Also, think about how national policies can either create or reduce uncertainty.
Unit 1 Assessment
- Receive a grade
Take this assessment to see how well you understood this unit.
- This assessment does not count towards your grade. It is just for practice!
- You will see the correct answers when you submit your answers. Use this to help you study for the final exam!
- You can take this assessment as many times as you want, whenever you want.
