Presentation is loading. Please wait.

Presentation is loading. Please wait.

Macroeconomics: Study of the determinants of Output, Employment and the Price Level Put less formally, macroeconomics is about understanding the causes.

Similar presentations


Presentation on theme: "Macroeconomics: Study of the determinants of Output, Employment and the Price Level Put less formally, macroeconomics is about understanding the causes."— Presentation transcript:

1

2 Macroeconomics: Study of the determinants of Output, Employment and the Price Level Put less formally, macroeconomics is about understanding the causes of prosperity and poverty.

3 National Income Accounting Purpose: measure the performance of the economy for purposes of public policy Created in the aftermath of the Great Depression GDP: most important measure of the economy’s performance

4 Gross Domestic Product GDP is the most important measure of economic output GDP is defined as the total value of all final goods and services produced by the domestic economy in one year

5 Measuring GDP Expenditure Approach: GDP = C + I + G + X - M Income Approach: GDP = Wages + Profits + Rents + Interest + Indirect Business Taxes

6 Types of Expenditures Consumption: – durable goods –nondurable goods –services Investment –inventories –producer goods –new construction Government Net Exports –exports –imports

7 Consumption as a Percentage of GDP

8

9 Investment as a Percentage of GDP

10

11 Government Spending as a Percentage of GDP

12 Government Expenditures

13 Government Revenues

14 Exports and Imports as a Percentage of GDP

15 Net International Investment Position

16 Types of Income Compensation Corporate Profits Proprietor Profits Interest Rents

17 Employee Compensation as a Percentage of National Income

18 Corporate Profits, Proprietorships, and Interest as a Percentage of National Income

19 GDP over time

20 Nominal and Real GDP

21 Real GDP

22 Percentage Change in GDP: The Business Cycle

23 Employment Unemployment rate--unemployed/labor force unemployed –between 16 and 65 –involuntarily unemployed –noninstitutionalized labor force--employed + unemployed

24 Unemployment Rate

25

26 Labor Force Participation Rate Number employed/Working age population

27 Types of Unemployment Frictional unemployment structural unemployment seasonal unemployment cyclical unemployment

28 Costs and Benefits of Unemployment Costs –Costs of supporting the unemployed –loss of output –crime, suicide, etc. –psychological costs Benefits (dubious) –disciplines the labor force –checks wage increases (Marx’s point) –reduces inflationary pressures

29 The Price Level Price level--average level of prices of a market basket of goods CPI--measures changes in prices of consumer goods PPI-- measures changes in prices of producer goods GDP Price Deflator--measures changes in prices of goods making up GDP

30 Price Level

31 Inflation (Percentage change in the Price Level)

32

33 Costs and Benefits of Inflation Costs –hurts creditors –hurts those on fixed incomes –increases uncertainty –costs of marking up prices Benefits –alleviates the burden of debt –raises profits, and therefore may help the economy


Download ppt "Macroeconomics: Study of the determinants of Output, Employment and the Price Level Put less formally, macroeconomics is about understanding the causes."

Similar presentations


Ads by Google