1. Macroeconomics

2. 4 factors of Analysis Economic Growth Employment Price Stability
Income distribution

3. Circular Flow of income
Two Sector model

4. the four-sector model Income if leakages = injections--->
Households
Savings
investments
Imports
Income
Exports
Income
Expenditure
Taxes
Government Spending
Firms
Leakages
Injections
if leakages = injections--->
the economy is at equilibrium

5. Gross Domestic Product (GDP)

10. Calculating GDP Output method
The total value of all final goods and services produces in an economy in a year
Output method

11. The total amount of income earned in an economy.
Calculating GDP
The total amount of income earned in an economy.
income method

12. The Total value of all spending in the economy
Calculating GDP
The Total value of all spending in the economy
Expenditure method

13. GDP GDP=C+I+G+(X-M) Consumer Expenditures + Investments +
Government Spending (Exports – Imports)
it is clear our nation is reliant on big foreign oil. ...
it is clear our nation is reliant on big foreign oil. ...

14. World Population

15. GDP

16. Gross National Product (GNP)
GNP counts all income earned by an economy’s factors of production regardless of where they are located.
An American company operating in Canada would count towards the United States’ GNP but not its GDP

17. GDP/GNP/NNP GDP=C+I+G+(X-M) GNP=GDP+net property income from abroad
NNP (Net National Product)=GNP-depreciation
Depreciation is the amount of capital consumption or the “used up” capital.

18. GDP figures are difficult to prove accuracy and difficult to draw provable conclusions

19. What is Development?

20. Human Development Index
healthy life, education, and standard of living are quantified and calculated.
Life expectancy at birth, Adult Literacy rate, and GDP per capita.

21. HDI
a numerical value between 0 and 1
.800 and higher--> High Human Development
> Medium Human Development
Less than > Low Human Development
HDI became popular around 1990 before that it was generally based on GDP per capita

22. HDI chart 1 Norway 0.971 2 Australia 0.970 3 Iceland 0.969 ... 13 USA
0.956 14
Austria
0.955 39
Bahrain
0.895 40
Estonia
0.883
...83
...Lebenon

23. HDI chart 84 Armenia 0.798 85 Ukraine 0.796 ...91 ...China ...0.772
...122
...Guatamala
0.704
123
Egypt
0.703
...158
Nigeria
0.511
159
Togo
0.499
...181
Afganistan
0.352
182
Niger
0.340

24. Gender Development Index (GDI) Gender Empowerment Measure (GEM)
Also
Gender Development Index (GDI)
Gender Empowerment Measure (GEM)
Human Poverty Index (HPI)
Lorenz Curve and Gini Index
Lorenz Curve for country ‘a’
Gini Index is a ratio from the absolute equality line and the Lorenz Curve
100 90 80 70 60 50 40 30 20 10
Cumulative percentage of total income
Line of absolute Equality
Cumulative percentage of total population

25. Consumer Price Index
These are the reports on price changes for about 80,000 items in 364 categories.
Example on pg.352
- All of this information is collected by the bureau of labor statistics.

26. Inflation This is the general rise in prices.
Its important to track of because it distorts the economic statistics that we keep
The real problem is that the dollar value of the final output appears to go up without any change in the quantity of goods and services

27. Stagflation
A period of Stagnant growth in the economy combined with inflation.
A measure of the cost of stagnation is the GDP Gap- which is the difference between the real GDP and the potential GDP.
(potential GDP would be that if all resources were fully employed)

28. Inflation along with unemployment represent an enormous economic failure and waste of resources of the nation and its people.

29. How Inflation is measured
Economist construct a Consumer price index, or producer price index or a GDP price deflator
Inflation is reported in annual rates if change in price level.
Change in Price level
Inflation Rate=
X 100
Beginning price level

30. Causes of Inflation
Demand pull theory- we try to buy more goods and services that the economy can produce.
The federal governments deficit- Governments government spending
Rising input cost- rising cost of labor drives up the cost of products for manufacturers

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