1. Macroeconomics -1 Jamshed uz Zaman Ref: Dornbusch and Fischer Macroeconomics 6 th Edition

2. Major Divisions of the Economy If economy were a circle then one half of it would be real sector and the other be Financial sector. Real Sector Economy Financial Sector

3. The real sector is dealt with by many ministries, while ministry of finance and central bank deal with the financial sector Real Sector Economy Financial Sector Ministry of: Agriculture, Industries Energy and natural resources Commerce Communic ations Water resources Etc. Ministry of Finance, Bangladesh Bank

4. Output of Real sector is GDP (Y) and Financial Sector is Money (MV) Interaction between the sectors determine price level. GDP (Y) Output of the Economy Money (MV) When Y  P  and When MV  P 

5. Definition Difference between Microeconomics and Macroeconomics Macroeconomics is the Study of the Economy as Whole.

6. Macro Topics in Macroeconomics Macroeconomic Theory, Economic Growth, Development, and Planning theory and Policy Economic Fluctuations, Forecasting, Stabilization and Inflation, Economic and Social Statistical data and analysis, Domestic monetary and Fiscal theories and institutions, International Finance, Labor Markets and Public Policy

7. National Income Accounting

8. Some Concepts on National Income GDP is defined as money value of all final goods and services produced in an economy in a year less the intermediate consumption. NDP= GDP – depreciation of fixed capital GNP is the value of final goods and services produced by domestically owned factors of production within a given period. GNP= GDP at factor cost – Net incomes from abroad [GDP - indirect taxes + subsidies + Net income abroad NNP = NDP + Net factor income from abroad, Real and Nominal GDP: Real GDP measures changes in physical output in the economy between different time periods by valuing all goods produced in the two periods at the same prices, or in constant taka.

9. Some Concepts on National Income Factor income= income out of economic activities Market Price = Factor costs + Net indirect taxes Factor Price = Market Price – Net indirect taxes Current Market Price = The price which rules in the market at a particular time Constant Price= when the change of value of money is adjusted

10. Problems of GDP Measurement Non Traded Goods are not accounted, Improvement in quality of goods cannot be measured, Some output are bad – crime and risk to national economy,

11. Gross Domestic Products: Source: BBS Gross Domestic Product FYGDP Deflator BillionCurrentConstant TakaMrketMarket 19941354.11515.189.37 19951525.21589.895.94 19961663.21663.399.99 19971807.01752.9103.09 19982001.81844.5108.53 19992197.01934.3113.58 20002370.92049.3115.69 20012535.52157.4117.53 20022732.02252.6121.28 20033005.82371.0126.77 20043329.72519.7132.15 20053684.82655.1138.78 GDP and GNI FY 2005 Billion Taka Agriculture and Forestry431 Fishing129 Mining and Quarrying29 Manufacturing424 Electricity, Gas and Water42 Constructions232 Wholesale and Retail Trade361 Hotel and Restaurants18 Transport, Storage and Communications256 Financial Intermediations43 Real Estate, Renting, and Business Activities208 Public Administration and Defence71 Education63 Health and Social Works57 Community, Social and Personal Services192 GDP at constant Producers' Price2555 Customs Excise and Duties100 GDP at constant Market Price2655 Net Factor Income from Abroad151 Gross National Income2806

12. GDP Who Prepares: BBS Who Uses: Govt. Offices, Central Bank, Researchers, Academics How to Collect GDP Numbers: From publications of BBS and Economic Trend of BB