Unit 3 → Subtopic 3.1
Expenditure Approach: GDP Role-Playing Debate
Gross Domestic Product (GDP) is one of the most important economic indicators, used to measure a country's overall economic activity. Economists use three main approaches to calculate GDP: the expenditure approach, income approach, and production approach. The expenditure approach focuses on the sum of consumer spending (C), investment (I), government spending (G), and net exports (X - M). However, debates exist over how accurate GDP is as a measure of a country’s well-being and whether it reflects economic reality. This project challenges students to engage in an in-class debate on the strengths and weaknesses of using the expenditure approach to measure GDP and its effectiveness in assessing economic performance.
Students will be divided into teams, with one side arguing in favor of the expenditure approach as the most effective method for measuring GDP, emphasizing its ability to track consumption, investment trends, and government policies. They should highlight how this approach provides insight into spending behaviors, economic growth patterns, and recession signals.
The opposing team will argue against the expenditure approach, pointing out its limitations—such as its inability to measure the informal economy, unpaid labor, or overall quality of life. They should also highlight the risk of misinterpreting economic well-being based on spending figures alone and discuss alternative ways to measure prosperity, such as the Human Development Index (HDI) or Gross National Happiness (GNH).
During the debate, students must use economic data and real-world case studies to support their arguments, analyzing how GDP growth correlates with social progress, economic inequality, and sustainability concerns. The debate will conclude with a class discussion on whether GDP should remain the dominant indicator of economic performance or if alternative measures should be prioritized.
The goal of this project is for students to understand the expenditure approach to GDP, its advantages, limitations, and the broader implications of economic measurement methods on policy decisions.
Recommended Procedure:
Research How the Expenditure Approach Measures GDP – Understand the formula GDP = C + I + G + (X - M) and why economists use this approach.
Develop Arguments for Both Sides – One team should argue why the expenditure approach is the best measure, while the other should highlight its shortcomings and propose alternative metrics.
Use Real-World Examples to Support Arguments – Research case studies of GDP growth and economic well-being, exploring cases where GDP misrepresented economic reality.
Prepare for the Debate and Anticipate Counterarguments – Identify the strongest points on both sides and use economic reasoning and historical data to strengthen claims.
Conduct the Debate and Reflect on GDP’s Role in Economics – Discuss whether GDP should remain the primary measure of economic success or if alternative indicators should be prioritized.
Suggested Sources:
Understanding GDP and the Expenditure Approach:
Investopedia: How GDP Is Calculated – https://www.investopedia.com
Khan Academy: GDP and the Circular Flow Model – https://www.khanacademy.org
2. Critiques and Alternative Economic Indicators:
World Bank: Limitations of GDP as a Measure of Economic Growth – https://www.worldbank.org
OECD: Beyond GDP – Alternative Measures of Progress – https://www.oecd.org
3. Case Studies on GDP and Economic Well-Being:
Harvard Business Review: Why GDP Growth Doesn’t Always Reflect Prosperity – https://hbr.org
The Balance: How GDP Misrepresents Economic Health – https://www.thebalancemoney.com
4. Government and Economic Policy Perspectives:
IMF: GDP vs. Human Development Indicators – https://www.imf.org
United Nations: The Role of Gross National Happiness in Economic Measurement – https://www.un.org
Grading Rubric:
Total Points: __ /20
