Macroeconomics Looking at the Big Picture

Composed of three main things Measurements of economic performance Evaluation Developing Policy

Measurements: Trying to measure the Level of Economic Activity  Basically measures Supply and Demand 1 Businesses can affect the whole economy

Who Collects? Why Collect this information? How would You use this information? The fact of the matter is our Economy is Unstable

Three types of Fluctuations Seasonal Secular Cyclical

The Business Cycle Peak/Prosperity Expansion/Recovery Recession/ contraction Level of Economy Time Trough/Depression

Indicators In order for economists to determine where we are in the business cycle we use Indicators. Three types:  Coincident  Leading  Lagging

#1 Economic Indicator GDP  Gross domestic Product  The market Value of all final goods and services produced within a nation in a given period of time.  No Intermediate Goods  Only made in Boarders of US

What about Price changes? Two types of GDP to account for price. Nominal GDP: # produced X $ in that year = Nominal GDP Real GDP: # produced X $ in Base year = Real GDP

GDP = GPA of economy What does GPA actually measure? Is GPA an accurate measure of your learning throughout High School? Why or Why not?  Fill out the Box

GNP: Gross National Product The market value of all final goods and services produced by the residents of a nation in a given period of time. Basically, all goods and services produced by American companies

GDP = Total Spending Who spends? Consumers (C) Government (G) Business (I) Net Exports (Exports - Imports) (X)

Who does most of the spending? How do you know? Who Should do the most spending?

Missing in GDP: Non-market activities Underground Economy Quality of life

GDP: IN or OUT Think of types of economic activities that are: Included in GDP Excluded in GDP

“When it comes time for GDP, what counts?” Coding:  Underline important details  Circle new names  * New terms  ? Mark anything unclear There will be more to do with these when finished