1. The branch of economic theory dealing with the economy as a whole and decision making by governments.
Macroeconomics

2. http://www. glencoe. com/video_library/index _with_mods. php
_with_mods.php?PROGRAM= &VIDEO=-1&CHAPTER=13

3. Ch 13- Measuring the Economy’s Performance
Section 1: National Income Accounting- The measurement of the national economy’s performance, dealing with the overall economy’s output and income

4. Five Major Stats that Measure the National Economy
Gross Domestic Product (GDP)
Net Domestic Product (NDP)
National Income (NI)
Personal Income (PI)
Disposable Personal Income (DPI)

5. GDP
Total dollar value of all goods and services produced in a nation in a single year
4 aspects of GDP
Measuring Value
Measuring Final Goods and Services
Computing GDP
Weaknesses of GDP

6. Measuring Value
Must measure value of all products and services, not numbers of products and services
Ex- one country produced 5 million paperclips; the other produces 3 million computers, which one has a greater GDP?

7. Measuring Final Goods and Services
Must not double count goods; instead measure the final product
Ex- are you going to measure the number of bike tires and the number of bikes made if you’re only going to sell the bikes?

8. Computing GDP
Four categories of expenditures are added together to compute GDP
Consumer goods and services
Investment (Business) goods and services
Government goods and services
Net Exports

9. Weaknesses of GDP
Does not measure the value of products and services of those who work off the books or buy off the books

10. NDP
Value of a nation’s total output (GDP) minus the total value lost through depreciation on equipment
Depreciation- loss of value because of wear and tear to durable and capital goods
Ex- cost to replace conveyor belt in factory
Cost of recall of automobiles with faulty parts

11. National Income
Total income earned by everyone in the economy

12. Personal Income
Total income that individuals receive before personal taxes are paid
Includes transfer payments – welfare, social security, Medicaid, Medicare, disability insurance, etc.

13. Disposable Personal Income
Income remaining for people to spend or save after all taxes have been paid

14. Ch 13- Section 2- Correcting Statistics for Inflation
Inflation- Prolonged rise in the general price level of goods and services

15. The Purchasing Power of Money
The real goods and services that money can buy
As inflation increases, the purchasing power of money decreases

16. Measures of Inflation Consumer Price Index (CPI)
Producer Price Index (PPI)
GDP Price Deflator

17. Consumer Price Index
Measure of the change in price over time of a specific group of goods and services used by the average household
The government tracks inflation on a monthly basis using a market basket ( 80,000 goods and services that the typical household uses)

18. Consumer Price Index Item A Item B Item C Year 1 112.50 225.00 110.00
121.50
243.00
128.00
Change in Index Points
9.00
18.00
Percent Change
9.00/112.50*100=8
18.00/225.00*100=8
18.00/110.00*100=16.4

19. Consumer Price Index 1999 2000 2001 Food 164.1 167.8 173.6 Clothing
131.3
129.6
127.3
Housing
163.9
169.6
200.6
Medical
250.6
260.8
272.8

20. Producer Price Index
Measure of the change in price over time that US producers charge for their goods and services

21. GDP Price Deflator
Price index that removes the effect of inflation from GDP so that the overall economy in one year can be compared to another year provides the government with the Real GDP a real measure of the value of goods produced in a single year in comparison with years past.

22. Ch 13- Section 3: Aggregate Demand and Supply

23. Aggregates The summing up of all the individual parts of the economy
Averages

24. Aggregate Demand
Total quantity of goods and services in the entire economy that all citizens will demand at any single time

25. Aggregate Supply
Real domestic output of producers based on the rise and fall of the price level

26. Demand and Supply Curve
As aggregate demand increases, aggregate supply decreases, and inflation increases

27. Ch 13- Section 4: Business Fluctuations
Business Fluctuations- Ups and downs in the economy

28. The Business Cycle Peak/boom Contraction Recession Trough
Expansion/ Recovery

30. NY1 | 24 Hour Local News | Year In Review | <i>2008 In Review:</i> U.S. Economy Stumbles Through Recession

31. Ch 13-Section 5: Causes and Indicators of Business Fluctuations
Causes of Business Fluctuations
Business Investment
Government Activity ( Fiscal and Monetary Policy)
External Factors (War; Limited Resources, Natural Disasters)
Psychological factors ( Aftermath of September 11th fear less spending)

32.
AC 360: Economic Woes
Is the stimulus working?

33. Economic Indicators Statistics that measure variables in the economy
3 Types
Leading Indicators
Coincident Indicators
Lagging Indicators

34. Leading Indicators
Statistics that point to what will happen in the economy
Exs- changes in the average number of hours for production workers in manufacturing; changes in stock prices, etc.

35. Coincident Indicators
Economic indicators that usually change at the same time as changes in overall business activity
Serve as evidence of the stage of the cycle you are in
Exs- changes in disposable personal income

36. Lagging Indicators
Indicators that seem to lag behind changes in overall business activity
Effects of changes in business cycle
Exs- changes in average length of unemployment; change in the average interest rate charged by banks to their best customers

37.
Dec 08 special broadcast
Nov 25 special broadcast 3:00 left