Textbook Reading Guide – Unit 3 GDP and Growth
Jim’s comments: Read Chapter 6 and 7 in the textbook. The table of contents for this chapter is shown below. The most important sections are the chapter introduction, 6.1, and 6.2. It’s also worth while to spend some time on the Key Terms list to make sure you understand those terms. These terms get used a lot in macroeconomics. If you really become comfortable that you know just what is meant by these terms, it will make it easier to read later chapters and understand theories as they’re presented.
Section 6.3 and 6.4 can be skimmed at this time. We’ll get into these two topics in more detail in a later unit. Don’t spend a lot of time on the statistics or calculations in these two sections now.
Read Chapter 7 as if it’s a story about how economies grow and people become better off (it is). This chapter presents a fair amount of graphs and statistics. You won’t need to memorize or know the stats. Rather, look a them and attempt to imagine them as telling a story: who’s rich and who’s not, what it takes for an economy to grow, etc. This chapter helps to illustrate why you need to understand the calculation of real growth that happens in chapter 6.
While you don’t need to focus on memorizing or calculating a some of the stats shown in Chapter 7, you will do some calculation of GDP growth rates and adjustment of nominal GDP to estimate real GDP in the Unit 3 worksheet. I strongly suggest looking at the tutorial in the Closer Look page for Unit 3 on this website. It will give you and explain two simple formulas/relationships that you can use to make those calculations. Also, the formula it gives you for calculating a growth rate is actually a pretty handy-dandy universal formula for just about any growth rate you want to calculate. It’s a useful thing to understand and know for your whole career and life.
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