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© The McGraw-Hill Companies, Macroeconomics is... the study of the economy as a whole it deals with broad aggregates but uses the same style of thinking about economic issues as in microeconomics.
© The McGraw-Hill Companies, Some key issues in macroeconomics Inflation –the rate of change of the general price level Unemployment –a measure of the number of people looking for work, but who are without jobs Output –real gross national product (GNP) measures total income of an economy it is closely related to the economy's total output
© The McGraw-Hill Companies, More key issues in macroeconomics Economic growth –increases in real GNP, an indication of the expansion of the economys total output Macroeconomic policy –a variety of policy measures used by the government to affect the overall performance of the economy
© The McGraw-Hill Companies, Inflation in the UK, Source: Economic Trends Annual Supplement, Labour Market Trends
© The McGraw-Hill Companies, Inflation in UK, USA and Germany
© The McGraw-Hill Companies, Unemployment in the UK Source: Economic Trends Annual Supplement, Labour Market Trends
© The McGraw-Hill Companies, Unemployment in UK, USA and Germany
© The McGraw-Hill Companies, Economic growth in UK, USA and Germany
© The McGraw-Hill Companies, The circular flow of income, expenditure and output Y HouseholdsFirms C + I IC S
© The McGraw-Hill Companies, Government in the circular flow Y C + I + G I C S HouseholdsFirmsGovernment C + I + G - T e TeTe G B - T d Y + B - T d
© The McGraw-Hill Companies, Adding the foreign sector To incorporate the foreign sector into the circular flow we must recognise that residents of a country will buy imports from abroad and that domestic firms will sell (export) goods and services abroad.
© The McGraw-Hill Companies, GDP and GNP Gross domestic product (GDP) –measures the output produced by factors of production located in the domestic economy Gross national product (GNP) –measures the total income earned by domestic citizens GNP = GDP + net income from abroad
© The McGraw-Hill Companies, Three measures of national output Expenditure –the sum of expenditures in the economy –Y = C + I + G + X - Z Income –the sum of incomes paid for factor services –wages, profits, etc. Output –the sum of output (value added) produced in the economy
© The McGraw-Hill Companies, National income accounting: a summary GNP (and GNI) at market prices GDP at market prices NYA C NX I NYA G NNP at basic prices Deprec'n National income Indirect taxes Wages and salaries Self- employment Profits, rents
© The McGraw-Hill Companies, What GNP does and does not measure Some care is needed: –to distinguish between real and nominal measurements –to take account of population changes –to remember that GNP is not a comprehensive measure of everything that contributes to economic welfare
1 Measuring a Nations Income Professor Chris Adam Australian Graduate School of Management University of Sydney and University of New South Wales.
Introduction to Macroeconomic Concepts. Re-cap Main government policy objectives concerning macroeconomic performance –Low unemployment –Low and stable.
PART 2 MONITORING THE MACROECONOMY GDP and the Standard of Living CHAPTER 5.
GDP and the Standard of Living CHAPTER 14 C H A P T E R C H E C K L I S T When you have completed your study of this chapter, you will be able to 1 Define.
Theme 3 : Economic indicators v1.0 Part I: GDP and Economic Growth.
MACROECONOMICS © 2011 Worth Publishers, all rights reserved S E V E N T H E D I T I O N PowerPoint ® Slides by Ron Cronovich N. Gregory Mankiw C H A P.
Economic Well Being Agec 217, Summer Economic Well Being Macroeconomics The study of the economy as a whole.
ECO Global Macroeconomics TAGGERT J. BROOKS SPRING 2014.
Aggregate Demand and Supply and Macroeconomic Problems.
Chapter 12 Gross Domestic Product and Growth How Can We Measure Economic Growth? Gross Domestic Product (GDP) – dollar value of all goods and services.
© The McGraw-Hill Companies, Some important questions Why does a top professional footballer earn so much more than a professor? Why does an unskilled.
AS/A2 The national economy The UK Economy: a Health Check How well has the economy been performing, and whats round the corner? The UK Economy: a Health.
Basic Keynesian Model Keynesian Cross Diagram. Measuring the macroeconomy Pág.2 GNPpm = GDP – factor incomes from abroad + factor incomes of foreigners.
© The McGraw-Hill Companies, Inflation is... Inflation is a rise in the price level. Pure inflation is when goods and input prices rise at the same.
MACROECONOMICS What is the purpose of macroeconomics? to explain how the economy as a whole works to understand why macro variables behave in the way they.
9 The Economy and Business Activity 9 The Economy and Business Activity.
Ecological Economics Lecture 06 05th May 2011 Rui Mota and Tiago Domingos Environment and Energy Section Department of Mechanical Engineering.
CH.10- AGGREGATE DEMAND/AGGREGATE SUPPLY BY J.A.SACCO.
Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Chapter 9 Growth.
1 Business Organisation & Environment External Environment.
You need: ◦ Pencils ◦ Pen (blue or black only) ◦ Personal ID You can not have: ◦ Phones ◦ Calculators.
Aggregate Supply and Aggregate Demand CHAPTER 27.
1 International Workshop Shenzhen, China April 2011 GDP Roundtable Discussions Some sharing by : Frederick W H HO.
© 2010 Pearson Addison-Wesley. Gross Domestic Product GDP Defined GDP or gross domestic product is the market value of all final goods and services.
© Copyright PCTI Group 2009 ANALYSIS OF NATIONAL INCOME.
© 2006 Prentice Hall Business Publishing Economics R. Glenn Hubbard, Anthony Patrick OBrien1 st ed. Prepared by: Fernando & Yvonn Quijano c h a p t e r.
Measuring GDP and Economic Growth CHAPTER 21. After studying this chapter you will be able to Define GDP and use the circular flow model to explain why.
Unit 3: Aggregate Demand and Supply and Fiscal Policy 1.
Unit 3 Macroeconomics. Unit Vocabulary Gross Domestic Product Business Cycle Consumer Price Index Unemployment Rate Monetary Policy Fiscal Policy Interest.
3.03Explain economic measurements and the business (economic) cycle.
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