Documented Problem Solving: Calculating Gross Domestic Product
- identify the components of GDP;
- determine items that are not part of GDP;
- calculate GDP.
Context for Use
Description and Teaching Materials
A MC, T/F or short answer question can be used for this activity. Below is a short answer question.
Use the information below to calculate GDP.
Consumer spending = $200 million
Investment spending = $55 million
State and local government spending = $120 million
Federal government spending = $80 million
Imports = $50 million
Exports = $45 million
Income taxes = $100 million
Answer: $450 million
Teaching Notes and Tips
Students are not asked to merely calculate the correct answer, but instead they are asked to write the process they employed to arrive at the answer. For example:
- First I reviewed the definition of GDP including the components.
- Based on my notes, in order to calculate GDP I should add consumption, investment, government spending and net exports.
- Income taxes are not a component of GDP.
- Government spending includes spending at the federal level of $80 million and state and local spending of $120 million.
- Net exports is equal to exports of $45 million minus imports of $50 million.
- Imported goods are part of another country's GDP.
- GDP = consumption + investment + government spending + net exports.
- In this case, $200 million + 55 million + $120 million + $80 million + $45 million = $500 million. Then imports of $50 million is subtracted to get GDP = $450 million.
References and Resources
Angelo, T.A. and Cross, K.P. (1993). Classroom Assessment Techniques: A Handbook for College Teachers. San Francisco: Jossey-Bass.