II. Unit II A. Measuring Domestic Output, National Income, and the Price Level 1. Important facts about the GDP figure 2. Three accounting identities a.

Slides:

Advertisements

Similar presentations

Money is the measure On the other hand… Macroeconomics is the study of how the economy operates as a whole – more than simply the sum of all markets.

Advertisements

Unit 1 – Macroeconomic Measurement and Basics Concepts Chapter 7 – Measuring Domestic Output and National Income.

Week 3.  The lesson today is going to center around the macro-economic forces which influence the US economy and the US large-cap companies.  How will.

MICROECONOMICS The part of economics concerned with individual decisions made by households and businesses, as well as individual markets.

Economics 202 Principles Of Macroeconomics

Macroeconomics. 1. Circular flow – the movement of output and income from one sector of the economy to another.

Chapter 7: Measuring Domestic Output and National Income.

Measuring the Economy: Gross Domestic Product

Macroeconomics - ECO 2013 Fall 2005 – 1 Term August 24 – December 16, 2005.

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

The economy at Full Employment Lecture notes 4 Instructor: MELTEM INCE.

7 - 1 Copyright McGraw-Hill/Irwin, 2005 Assessing the Economy’s Performance Gross Domestic Product Expenditures Approach Income Approach Other National.

Chapter Two National Income Accounting Gross Domestic Product and Gross National Product 1. Calculating GDP Final goods and value added current output.

Measuring Domestic Output and National Income

Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Macroeconomics 7/e by Jackson and McIver Slides prepared by Muni Perumal, University of Canberra,

© The McGraw-Hill Companies, 2002 Week 8 Introduction to macroeconomics.

Aggregate Demand and the Powerful Consumer Chapter 8.

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

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.

Topic 3: Fiscal Policy Circular Flow Keynesian Economics Taxes and Government Spending 1.

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

GrossDomesticProduct. Objectives Discuss GDP and how economists measure it. Classify economic events by reference to four macroeconomic categories, and.

1 LECTURE 1 The Circular Flow and National Income Accounting.

The Aggregate Expenditures Model 11 McGraw-Hill/IrwinCopyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

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

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.

1 of 34 © 2014 Pearson Education, Inc. CHAPTER OUTLINE 20 Part 1 Open-Economy Macroeconomics: The Balance of Payments and Exchange Rates The Balance of.

PowerPoint Presentation by Charlie Cook Copyright © 2004 South-Western. All rights reserved. Chapter 21 The Macroeconomic Environment.

Measuring Domestic Output, National Income, and the Price Level 7 C H A P T E R.

Table 5.1 The Estimated Size of U.S. Manufactured Capital Stock (2004, end of year, trillions of dollars) Equipment and software5.4 Structures13.9 Residences14.8.

Chapter 6 Presentation 2- GDP Calculation. Two Ways of Calculating GDP 1. The Expenditures Approach- looks at all of the money spent buying a product.

Chapter 7 Measuring Domestic Output and National Income Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without.

Measuring the Economy. Vocabulary Gross Domestic Product (GDP) GDP per Capita Base Year Business Cycle Prosperity Recession Depression Recovery Inflation.

Gross Domestic Product (GDP)  GDP is the market value of all final goods and services produced within a nation in a year  GDP is an aggregate measure.

Copyright © 2009 Pearson Addison-Wesley. All rights reserved. Chapter 2 The Measurement of Income, Prices, and Unemployment.

CHAPTER NINE NOTES-AP I. WHAT DETERMINES GDP? A. THE NEXT TWO CHAPTERS FOCUS ON THE AGGREGATE EXPENDITURES MODEL. DEFINITIONS AND FACTS FROM PREVIOUS CHAPTERS.

Economic growth Macroeconomics 1. Fundamental macroeconomic indicators Economic growth Unemployment Inflation 2.

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

7 - 1 Copyright McGraw-Hill/Irwin, 2002 Importance of Macroeconomic Measurement Gross Domestic Product Expenditures Approach Income Approach Other National.

Chapter 7 Measuring Domestic Output and National Income Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without.

Gross Domestic Product GDP

Measuring Domestic Output and National Income

Macroeconomics Issues and Measurement Chapter 15

GDP, CPI, Unemployment and a bunch of numbers

A Basic Model of the Determination of GDP in the Short Term Chapter 16

Overview of Macroeconomics

ECN 200: Introduction to Economics Macroeconomic Aggregates

Figure 9.1 U.S. Real GDP and NBER Recessions

Measuring Domestic Output and National Income

Figure 9.1 U.S. Real GDP and NBER Recessions

Table 5.1 The Estimated Size of U.S. Manufactured Capital Stock

Measurement of Economic Performance

Measurement of Economic Performance

Measuring Domestic Output,

Famous Economic Formula

Measuring Domestic Output and National Income

Saving and Investment in the National Income Accounts

Macroeconomics ECN 3102 CHAPTER 2.

الفصل الرابع: لمحة في الاقتصاد الكلي

Measuring Domestic Output and National Income

GDP Gross Domestic Product

Chapter3 The macro-economic environment

Macroeconomics Intro to GDP.

An activity for “The ABCs of GDP” (Extra Credit Spring 2009)

Macroeconomics Economic Indicators.

An activity for “The ABCs of GDP” (Extra Credit Spring 2009)

Why GDP Is Important.

Measuring a Nation’s Income

June 2002 NATIONAL ECONOMY Part 1

GDP Expenditures: What Is GDP and How Do We Measure It?

Presentation transcript:

II. Unit II A. Measuring Domestic Output, National Income, and the Price Level 1. Important facts about the GDP figure 2. Three accounting identities a. The expenditures approach to GDP b. The income approach to GDP c. The leakages/injections identity B. Macroeconomic Instability: Unemployment and Inflation 1. Types of unemployment 2. Economic and noneconomic costs of unemployment 3. Full employment... the goal defined 4. Redistributive and output effects of inflation

EXPENDITURES(NO GOV. OR INT'L TRADE) GDP - - C + ACTUAL I

EXPENDITURES(NO GOV. OR INT'L TRADE) GDP - - C + ACTUAL I CONSUMPTION... includes expenditures by households on...

GDP - - C + ACTUAL I CONSUMPTION... includes expenditures by households on... CONSUMPTIONoccurs when output goes to households. EXPENDITURES(NO GOV. OR INT'L TRADE)

) GDP - - C + ACTUAL I INVESTMENT (GROSS PRIVATE DOMESTIC INVESTMENT) I G 1. All final purchases of machinery, equipment, and tools by business enterprises 2. All construction (nongovernmental) 3. Changes in inventories EXPENDITURES(NO GOV. OR INT'L TRADE)

GDP - - C + ACTUAL I INVESTMENT occurs when output is retained by the business community (or sector). EXPENDITURES(NO GOV. OR INT'L TRADE)

GDP - - C + ACTUAL I INVESTMENT occurs when output is retained by the business community (or sector). Investment is the PHYSICAL creation of capital. EXPENDITURES(NO GOV. OR INT'L TRADE)

) GDP - - C + ACTUAL I CONSUMPTIONoccurs when output goes to households. INVESTMENT occurs when output is retained by the business community (or sector). EXPENDITURES(NO GOV. OR INT'L TRADE)

GDP - - C + ACTUAL I STUFF PRODUCED BY THE ECONOMY DURING THE YEAR EXPENDITURES(NO GOV. OR INT'L TRADE)

GDP - - C + ACTUAL I STUFF PRODUCED BY THE ECONOMY DURING THE YEAR STUFF WHICH GOES TO HOUSEHOLDS DURING THE YEAR EXPENDITURES(NO GOV. OR INT'L TRADE)

) GDP - - C + ACTUAL I STUFF PRODUCED BY THE ECONOMY DURING THE YEAR STUFF WHICH GOES TO HOUSEHOLDS DURING THE YEAR STUFF RETAINED BY BUSINESS SECTOR DURING THE YEAR EXPENDITURES(NO GOV. OR INT'L TRADE)

GDP - - C + ACTUAL I STUFF PRODUCED BY THE ECONOMY DURING THE YEAR STUFF WHICH GOES TO HOUSEHOLDS DURING THE YEAR STUFF RETAINED BY BUSINESS SECTOR DURING THE YEAR THE STUFF MUST GO SOMEWHERE.. EXPENDITURES(NO GOV. OR INT'L TRADE)

GDP - - C + ACTUAL I STUFF PRODUCED BY THE ECONOMY DURING THE YEAR STUFF WHICH GOES TO HOUSEHOLDS DURING THE YEAR STUFF RETAINED BY BUSINESS SECTOR DURING THE YEAR THE STUFF MUST GO SOMEWHERE.. AND THERE ARE ONLY TWO PLACES FOR IT TO GO!!! EXPENDITURES(NO GOV. OR INT'L TRADE)

) GDP - - C + ACTUAL I INVESTMENT (GROSS PRIVATE DOMESTIC INVESTMENT) I G 1. All final purchases of machinery, equipment, and tools by business enterprises 2. All construction (nongovernmental) 3. Changes in inventories EXPENDITURES(NO GOV. OR INT'L TRADE)

GDP - - C + ACTUAL I INVESTMENT occurs when output is retained by the business community (or sector). EXPENDITURES(NO GOV. OR INT'L TRADE)

GDP - - C + ACTUAL I INVESTMENT (GROSS PRIVATE DOMESTIC INVESTMENT) I G 1. All final purchases of machinery, equipment, and tools by business enterprises 2. All construction (nongovernmental) 3. Changes in inventories EXPENDITURES(NO GOV. OR INT'L TRADE)

GDP - - C + ACTUAL I INVESTMENT occurs when output is retained by the business community (or sector). EXPENDITURES(NO GOV. OR INT'L TRADE)

GDP - - C + ACTUAL I INVESTMENT (GROSS PRIVATE DOMESTIC INVESTMENT) I G 1. All final purchases of machinery, equipment, and tools by business enterprises 2. All construction (nongovernmental) 3. Changes in inventories EXPENDITURES(NO GOV. OR INT'L TRADE)

ASSUME: STANDARDIZED BOXES OF FINAL GOODS EACH PRICED AT $40

BUSINESS HOUSEHOLDS BOX WAREHOUSE

GDP C + ACTUAL I BOXES $160

BUSINESS HOUSEHOLDS BOX WAREHOUSE

GDP C + ACTUAL I BOXES 2 BOXES $80 $160

BUSINESS HOUSEHOLDS BOX WAREHOUSE

GDP C + ACTUAL I BOXES 2 BOXES $80 $160 2 BOXES $80

BUSINESS HOUSEHOLDS BOX WAREHOUSE

GDP C + ACTUAL I BOXES $160

BUSINESS HOUSEHOLDS BOX WAREHOUSE

GDP C + ACTUAL I BOXES $160 6 BOXES $240

BUSINESS HOUSEHOLDS BOX WAREHOUSE

BUSINESS HOUSEHOLDS BOX WAREHOUSE

BUSINESS HOUSEHOLDS BOX WAREHOUSE

BUSINESS HOUSEHOLDS BOX WAREHOUSE

GDP - - C + ACTUAL I INVESTMENT (GROSS PRIVATE DOMESTIC INVESTMENT) I G 1. All final purchases of machinery, equipment, and tools by business enterprises 2. All construction (nongovernmental) 3. Changes in inventories EXPENDITURES(NO GOV. OR INT'L TRADE)

BUSINESS HOUSEHOLDS BOX WAREHOUSE

BUSINESS HOUSEHOLDS BOX WAREHOUSE

GDP C + ACTUAL I BOXES $160 6 BOXES $ BOXES -$80

BUSINESS HOUSEHOLDS BOX WAREHOUSE

BUSINESS HOUSEHOLDS BOX WAREHOUSE

BUSINESS HOUSEHOLDS BOX WAREHOUSE

BUSINESS HOUSEHOLDS BOX WAREHOUSE

BUSINESS HOUSEHOLDS BOX WAREHOUSE $40 SKYSCRAPER

BUSINESS HOUSEHOLDS BOX WAREHOUSE $40 SKYSCRAPER

BUSINESS HOUSEHOLDS BOX WAREHOUSE

GDP C + ACTUAL I BOXES $160

BUSINESS HOUSEHOLDS BOX WAREHOUSE

GDP C + ACTUAL I BOXES $160 4 BOXES $160

BUSINESS HOUSEHOLDS BOX WAREHOUSE

GDP C + ACTUAL I BOXES $160 4 BOXES $160 0 BOXES $0

GDP C + ACTUAL I BOXES $160 WHY "ACTUAL"?

Suppose producer wishes to increase the inventories he is carrying by 2 boxes during the year. Suppose he that he can sell 4 boxes during the year. He will therefore produce 6 boxes. believes EXPENDITURES(NO GOV. OR INT'L TRADE)

Suppose producer wishes to increase the inventories he is carrying by 2 boxes during the year. He will therefore produce 6 boxes. Suppose he sells only 2 boxes. actually Suppose he that he can sell 4 boxes during the year. believes

Suppose producer wishes to increase the inventories he is carrying by 2 boxes during the year. He will therefore produce 6 boxes. ACTUAL I IS 4 BOXES. PLANNED I IS ONLY 2 BOXES. Suppose he that he can sell 4 boxes during the year. believes Suppose he sells only 2 boxes. actually

Suppose producer wishes to increase the inventories he is carrying by 2 boxes during the year. Suppose he believes that he can sell 4 boxes during the year. He will therefore produce 6 boxes. believes Suppose he actually sells only 2 boxes. actually ACTUAL I IS 4 BOXES. PLANNED I IS ONLY 2 BOXES. HE "ACCIDENTALLY" BUYS 2 EXTRA BOXES