Analysis of the Financial System and the Economy

Slides:

Advertisements

Similar presentations

ECO Global Macroeconomics

Advertisements

Circular Flow and Gross Domestic Product

Economics 202 Principles Of Macroeconomics

Source:Bureau of Economic AnalysisBureau of Economic Analysis Consumer Spending by Type, 2002 (in billions) Total consumption by U.S. households in 2002.

Chapter 3: National Income. Production Function Output of goods and services as a function of factor inputs Y = F(K, L) Y = product output K = capital.

Introduction & The Expenditure Approach

GDP and Unemployment Chapter 5.

GDP and Unemployment Chapter 5. The Circular Flow Goods Other countries Financial markets Government Firms (production) Household Taxes Factor services.

Maclachlan, Macroeconomics, 9/30/04 1 Principles and Policies I: Macroeconomics Chapter 7: National Income Accounting.

Module 10: The Circular Flow and Gross Domestic Product

McGraw-Hill/Irwin Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 15: Saving, Capital Formation, and Financial Markets.

GDP and the CPI: Tracking the Macroeconomy

Circular Flow Chapter 2-3.

Chapter 15 Gross Domestic Product

Chapter 11 Practice Quiz Tutorial Gross Domestic Product

07 Measuring Domestic Output and National Income McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

1 Chapter 15 Gross Domestic Product Key Concepts Key Concepts Summary Practice Quiz Internet Exercises Internet Exercises ©2002 South-Western College Publishing.

Balance of Payments 3/2/2012 Unit 3: Exchange Rates.

Chapter 20 Financial Aspects of Household and Firm Behavior ©2000 South-Western College Publishing.

Measuring the Economy. The Economy as a Circular Flow Resources FirmsHouseholds Goods and Services Expenditures Income.

Circular Flow in Economics

Alomar_1111 Chapter 7: Measuring Domestic Output, National Income, and Price Level.

Gross Domestic Product (GDP) What is Gross Domestic Product and how we measure it? Why is this measure important? What are the definitions of the major.

Chapter 7Copyright ©2010 by South-Western, a division of Cengage Learning. All rights reserved ECON Designed by Amy McGuire, B-books, Ltd. 7 CHAPTER Tracking.

Module 10 Mar  It is a diagram of a simplified representation of the macro-economy.  National income and product accounts or national accounts.

Income Approach National Income Accounting. Two Methods of Calculating GDP There are two methods of calculating GDP: the expenditure approach and the.

1 of 37 Chapter: 7 >> Krugman/Wells ©2009  Worth Publishers Circular Flow & GDP.

© 2007 Worth Publishers Essentials of Economics Krugman Wells Olney Prepared by: Fernando & Yvonn Quijano.

Copyright © 2003 by South-Western/Thomson Learning. All rights reserved. CHAPTER 9 Market Efficiency.

GDP : Gross Domestic Product

Eco 200 – Principles of Macroeconomics Chapter 7: National Income Accounting.

The National Accounts Chapter 7-1. What you will learn in this chapter: How economists use aggregate measures to track the performance of the economy.

Copyright 2011 The McGraw-Hill Companies 15-1 Assessing the Economy’s Performance Three Approaches to GDP Expenditure Approach GDP Approaches Compared.

MACROECONOMICS © 2011 Worth Publishers, all rights reserved S E V E N T H E D I T I O N PowerPoint ® Slides by Ron Cronovich N. Gregory Mankiw C H A P.

Gross Domestic Product. National Income Accounting is a system used to measure the aggregate income and expenditures for a nation Gross Domestic Product.

1 Chapter 4 Analysis of the Financial System and the Economy © 2000 South-Western College Publishing.

GDP and the CPI: Tracking the Macroeconomy Chapter 7 THIRD EDITIONECONOMICS and MACROECONOMICS MACROECONOMICS By Nimantha Manamperi.

ECONOMICS: Principles and Applications 3e HALL & LIEBERMAN © 2005 Thomson Business and Professional Publishing The Classical Long-Run Model.

Market system, circular flow and GDP Market System (Chapter 2) Circular Flow Model (Chapter 2) GDP (Chapter 5) Nominal GDP and Real GDP (Chapter 5)

National Income Accounting Lecture2. What is National Income? National income is defined as the total value of all goods and services produced within.

24 Measuring Domestic Output and National Income McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

8 8 Aggregate Demand and the Powerful Consumer Men are disposed, as a rule and on the average, to increase their consumption as their income increases,

The Circular Flow Model

MEASURING NATIONAL OUTPUT AND NATIONAL INCOME

AGGREGATE DEMAND, DOMESTIC PRODUCT AND NATIONAL INCOME Asst. Prof. Dr

Measuring Domestic Output and National Income

National-Income Accounting

Chapter 11 Gross Domestic Product

Gross Domestic Product

Understand the role of business in the global economy.

Prepared by Anton Ljutic

6 Measuring Domestic Output and National Income.

Measuring Domestic Output and National Income

Section 3 Module 10.

Measurement of Economic Performance

Gross Domestic Product

Measuring Domestic Output and National Income

Chapter 3 Financial Statements

Measuring Domestic Output and National Income

Circular Flow and GDP C H E C K L I S T

INTEREST RATES, MONEY AND PRICES IN THE LONG RUN

The Circular Flow Model

Saving, Investment, and the Financial System

Tracking the Macroeconomy

6 Measuring Domestic Output and National Income.

The Circular Flow and GDP

National Income: Where it Comes From and Where it Goes

The Two-sector Model of the Economy (Households and Firms)

Circular Flow Chapter 3.

Saving, Investment, and the Financial System

Presentation transcript:

Analysis of the Financial System and the Economy CHAPTER 4 Analysis of the Financial System and the Economy

Financial Statement of J. P Financial Statement of J. P. Young, January 1, 2002 through December 31, 2002 Expenditures (Uses) Receipts (Sources) Consumption $44,000 (spending on goods and services) Wages and salaries $47,000 Saving $ 8,000 Dividends $ 3,000 (acquisition of summer home) $ 5,000 (acquisition of financial claims) $ 3,000 Interest $ 2,000 Consumption plus saving $52,000 Rent $ 0 Disposable income $52,000

Financial Statement of All Purpose Enterprise Inc Financial Statement of All Purpose Enterprise Inc., January 1, 2002 through December 2002 (in Millions of Dollars) (A) Total expenses $ 5,400 Total sales $5,900 Wages and salaries 5,700 Interest on debt 200 Cost of raw materials purchased from other firms 500 Net income (sales – expenses) $ 500 minus dividends 300 equals retained earnings $ 200 (C) Business investment spending $ 500 Financing: Financing: (new capital goods– plant and New bonds issued $300 equipment—and/or additions to Retained earnings 200 inventories $500

National Income and Expenditures for Our Hypothetical Economy, 2001 (in Billions of Dollars) Sector Households Business firms Economy Income Disposable personal income $5,200 Retained earnings $200 National income $5,400 Expenditures Consumption expenditures $4,400 Investment expenditures $500 Domestic product $5,400 Income – Expenditures = Deficit or Surplus Surplus $300 Deficit - $300

The Circular Flow Diagram Money Flows from Households to Firms to Pay for Goods and Services PRODUCT MARKETS Products Flow from Firms to Households Price Index Real GDP AS AD Surplus Funds Flow from SSUs to DSUs HOUSEHOLDS FINANCIAL MARKETS FIRMS Supply Interest Rate Demand Loanable Funds Wages Labor Supply Demand Labor and Other Factors Flow from Households to Firms FACTOR MARKETS Factor Payments (Wages, etc.) Flow from Firms to Households

The Product Market: Aggregate Demand and Aggregate Supply. Price Index Real GDP (in Billions) AD $5,400 A AS 1.0

The Factor Market: The Demand for and Supply of Labor Wage Rate/ Hour Labor Hours (in Billions) D 200 B S $23.50

The Financial System: The Demand for and Supply of Loanable Funds Interest Rate (Percent) S 4 C D $300 Loanable Funds (in Billions)

Goals of Various Spending Units Households Maximize Utility (Satisfaction) Firms Maximize Profits