Long-Run Economic Growth: Context Rich Problem

Michelle Kim; Glendale Community College
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This material is replicated on a number of sites as part of the SERC Pedagogic Service Project


This is a scenario-based problem where students are asked to recall their learning about long-run economic growth to apply to a specific developing country.

Learning Goals

Students will learn to recognize the determinants of long-run economic growth for a country with specific conditions and provide suggestions for improving its economy.

Context for Use

This activity can be used in a college level Principles of Macroeconomics class of any size. You can choose to have the students work in pairs for a more engaged discussion, individually as an in-class assignment, or outside of class as homework. If conducted in class, roughly 30-40 minutes will be needed.

Description and Teaching Materials

You are on a summer vacation in a foreign country called Macrolandia and on your way to the post office to send some post cards to friends and family back home (Their telephone service broke down a few days ago and is still in the process of repair. You thought post cards will be more personal and fun anyway though). Along the way, you are excited to find a very expensive Patek-Philippe watch lookalike for a price equivalent to $12, oh wait, $10, no, $7 (the exchange rate is crazy in fluctuation here) . . .

(Please see the attached file for the full text of the problem.)

Long-Run Economic Growth CRP (Microsoft Word 2007 (.docx) 12kB Mar26 12)

Teaching Notes and Tips

  • The activity is typically given after the concept was studied in class, either at the end of a chapter or content module or at the end of the term to bring different concepts together.
  • It might be necessary to remind the students, especially if it is the first time students are exposed to this type of problem, that the audience be very clear in the answer. The response should not be written as an exam or homework essay, but as if they are actually talking to the person in the scenario.
  • The activity can be combined with cooperative learning, for example, using Send-A-Problem setting where students work in groups of 2-4 to answer the question, send their answer to the next group to be reviewed with comments, and keep rotating the answers to the next group, eventually getting a chance to read and review all the groups' responses in the class.
  • The difficulty of the problem can be adjusted by controlling the complexity of the response, e.g., students can be asked to prioritize, in addition to providing, their suggestions.


  • The problem can check for students' ability to transfer knowledge by asking them to answer the question once without using economic jargon, and another time, with specific economic concepts, to see that students are able to make the connection between theoretical understanding and practical application in the real world.
  • Students should be able to not only respond to the problem but defend their answer with logic and concrete economic reasoning.
  • The activity can be expanded on a deeper level by encouraging students to combine and incorporate ideas from different points of the course.

References and Resources