GDP and Classical Model Closed economy
1. Is GDP a good measure of economic welfare? List and explain SEVEN important types of
economic activity that it doesn’t include.
2. Consider how each of the following events is likely to affect the real GDP of the country
concerned. Do you think the change in real GDP reflects a similar change in economic well-
being?
(a) A freak hurricane in northern France forces Disneyland Paris to shut down for a
month.
(b) The discovery of a new easy-to-grow strain of wheat increases British farm harvests.
(c) Increased hostility between unions and management sparks a rash of strikes in Italy.
(d) Firms throughout the German economy experience falling demand, causing them to
lay off workers.
(e) The European Parliament passes new environmental laws that prohibit EU firms
from using production methods that emit large quantities of pollution.
(f) More Irish university students drop out of university to take jobs painting houses.
(g) Greek fathers reduce their working weeks in order to spend more time with their
children.
3. In a country the unemployment rate is 6 per cent. If the population is 300 million, the
number unemployed is 6 million and the number employed is 94 million, what is the size of
the workforce?
4.
Category Number of People (millions)
Total population 246
1. Is GDP a good measure of economic welfare? List and explain SEVEN important types of
economic activity that it doesn’t include.
2. Consider how each of the following events is likely to affect the real GDP of the country
concerned. Do you think the change in real GDP reflects a similar change in economic well-
being?
(a) A freak hurricane in northern France forces Disneyland Paris to shut down for a
month.
(b) The discovery of a new easy-to-grow strain of wheat increases British farm harvests.
(c) Increased hostility between unions and management sparks a rash of strikes in Italy.
(d) Firms throughout the German economy experience falling demand, causing them to
lay off workers.
(e) The European Parliament passes new environmental laws that prohibit EU firms
from using production methods that emit large quantities of pollution.
(f) More Irish university students drop out of university to take jobs painting houses.
(g) Greek fathers reduce their working weeks in order to spend more time with their
children.
3. In a country the unemployment rate is 6 per cent. If the population is 300 million, the
number unemployed is 6 million and the number employed is 94 million, what is the size of
the workforce?
4.
Category Number of People (millions)
Total population 246
