Content Standard 18: Economic Fluctuations

Grade 8 Benchmarks

1. GDP is a basic measure of a nation’s economic output and income. It is the total market value, measured in dollars, of all final goods and services produced in the economy in one year.

7. A recession occurs when overall levels of income and employment decline.

Grade 12 Benchmarks

1. An increase in nominal GDP may reflect increases in the production of goods and services and also increases in prices. GDP adjusted for price changes is “real GDP.” Real GDP per capita is a basis for comparing material living standards over time and among different countries.

2. The potential level of real GDP for a nation is determined by such things as the size and skills of its labor force, the size and quality of its stock of capital goods, the quantity and quality of its natural resources, its technological capabilities, and its legal and cultural institutions.

3. A business cycle involves fluctuations of real GDP around its potential level.

4. Fluctuations of real GDP around its potential level occur when overall spending declines, as in a recession, or when overall spending increases rapidly, as in recovery from a recession or in an expansion.

5. When real GDP rises above its potential, there is a tendency for inflation to rise. When real GDP is below its potential (as in a recession), there is a tendency for inflation to fall.

• Planet Money: How GDP Is Like Your GPA
• GDP and Pizza: Economics for Life
• COVID-19’s Effects on the Economy and the Fed’s Response (Page One Economics®)
• Economic Lowdown Video Series—Gross Domestic Product