The federal government is responsible for funding a lot of the technological innovation that we often attribute to private companies. While the purpose of some of these innovations is to be applied to the military innovation of the US armed forces, a lot of them also end up as vital components of civilian lives. Private companies may not be willing to invest in technological advancements if they may come at a cost to shareholder profit, but the government isn’t as concerned with profitability.
It’s the night before Christmas and the elves are hard at work producing toys for Santa to deliver on Christmas. The North Pole is an engaging illustration of an economy and a good foundation for reviewing nominal and real GDP. The elves in Santa’s workshop illustrated assembly-line efficiency and tangible outputs based on the number of toys produced. Elves produce a wide range of toys including rocking horses, building blocks, and dolls. The assembly line scene can be used as a reminder about the difference between intermediate goods (such as the doll’s clothing) and the final good (the entire doll) and which items are counted toward GDP.
Thanks to Mandy Mandzik for the clip recommendation. Check out her working paper, All I Want for Christmas is an A on My Econ Final: A Holiday-Themed Review Class, for more Christmas-themed economics examples. The appendix includes hypothetical values for these products so that students can practice calculating real and nominal GDP.