GDP M A C R O E C O N O M I C S

Save this PDF as:
 WORD  PNG  TXT  JPG

Size: px
Start display at page:

Download "GDP M A C R O E C O N O M I C S"

Transcription

1 GDP M A C R O E C O N O M I C S

2 Gross Domestic Product GDP The market value of all final goods and services produced within a country during a given period of time. Breaking down the definition: 1. Market Value production is measured in dollar terms. 2. Final G&S a product purchased by a final user. Excludes intermediate goods to avoid double counting. 3. Current Production only production that occurs during a specified time period is included (i.e. mo, quarter, year). It is a measurement of national output.

3 What Is Not Counted Pure financial transactions Public transfer payments Underreported legal activities Illegal activities Household production

4 GDP and National Income GDP is an approximate measurement of National Income, since production turns into income. For 2010, GDP was $14,527 trillion and National Income was $12,840 trillion. NI = GDP - Capital Consumption Adjustment - Indirect Business Taxes- Business Transfer Payments + Net Foreign Factor Income + Government Subsidies less Current Surplus of Government Enterprises - Statistical Discrepancy Lets assume that GDP = Y, therefore GDP/capita = income per person.

5 Why Are We Interested in GDP? Typically as GDP grows, especially GDP/capita, the well being of humans also increases. There is a strong connection between economic growth and happiness, health, longevity, infant mortality, education, and opportunity.

6 GDP/Capita As of the second quarter in 2013, GDP/capita = $53,082 in current prices. This included average income of infants and retired people. GDP/worker = $107,199 $115,613, excluding the unemployed As of July 2013, median household income was $52,113 and the mean household income for second quarter of 2013 is $114, Additional information on income distribution

7 Shortcomings as a Measure of Well-Being The value of leisure is not included. Pollution and other negative effects of production are not adjusted for. Crime and other social ills are not adjusted for. GDP measures the size of the pie, but is silent on how it is divided.

8 Does Growth Equal Progress? While GDP, especially GDP/capita is a basic measurement of progress, it is not without criticism. It says nothing about equality, hours worked, personal debt, pension coverage, poverty rates, incarceration rates, environmental impact, CO2 emission, etc.

9 How to Calculate GDP Three methods used to calculate GDP Expenditure Approach Adds up the market value of all domestic expenditures made on final goods and services. Value Added or Production Approach Add up the value of goods at each stage of production in the economy. Income Approach Adds up all the income in the economy; labor, capital, land, and entrepreneurs. We will focus on the expenditure approach, but all three empirical estimations yield similar results.

10 Components of GDP: Expenditure Approach (C) Consumption: expenditure by HHs on final goods and services. (I) Investment: expenditure by firms on new capital along with new housing. (G) Government purchases: expenditure by governments on final goods and services. (Nx) Net exports: (exports imports)

11 Components of GDP In 2012, real GDP was $15,470.7*. Household expenditures were $10,517.6 (68%) with $6,982.7 on services. Investment spending was 2,436.0 (15.7%). Government expenditures on goods and services totaled $2,963.1 ( 19.2%) with $1,742.8 coming from state and local governments. Net exports accounted for (-2.7%) *Numbers are in billions Source: bea.gov

12 Components of GDP: Expenditure Approach In theory, the spending on final goods and services should equal the value of what is produced. GDP = C + I + G + Nx Example: C = $2,000, I = $500, G = $600, and Nx = -$100 GDP =?

13 Real GDP

14 Consumer Oriented Economy Real personal expenditures as a percent of real GDP

15 Investment as a Percentage of GDP

16 Gov t Spending as a Percentage of GDP.

17 Total Gov t Spending as a Percentage of GDP

18 Other Measurements of Total Production GNP Gross National Product A measurement of total production by all national residents. National Income GDP that takes into consideration depreciation and other factors. Personal Income HH income minus corporate profits plus transfer payments. Disposable income Personal income minus taxes

19 Other Measurements of National Well-Being HDI Human development index, which takes into consideration life expectancy, adult literacy rates, and income per person. As of 2012, Norway had the highest HDI while the USA came in third. GPI includes things like the value of volunteer and household production minus the cost of pollution and crime. No new data since World Happiness Report measures life satisfaction and emotional happiness. As of 2013, Denmark ranked first while the USA came in at 17 th.

20 Real v Nominal Since GPD uses market values to measure total production, we must be careful about interpretations over time due to inflation. Nominal GDP The value of final goods and services evaluated at current prices. Real GDP The value of final goods and services evaluated at a base-year price.

21 Real vs. Nominal GDP Assume a two good economy; pizza and cars Year 1 Year 2 P Q P Q Pizza Pizza Car 1, Car 2, Calculate the Real and Nominal GDP for Year 2, using Year 1 as the base year.

22 Growth Rate Calculating (straight line) growth rate GR = X new Xold X old * 100 From the previous example, the nominal growth rate would equal 22,000 11,000 11,000 * 100 = 100; The economy doubled! The real growth rate would equal 11,000 11,000 11,000 * 100 = 0; In real terms, the economy did not grow.

23 GDP Implicit Price Deflator GDP deflator A measurement of the price level (i.e. inflation), calculated by: GDP Deflator = Nominal GDP Real GDP * 100 Real GDP uses prices for an arbitrary base year. The arbitrary base year is 2009 = 100. E.g. If the GDP deflator is for April 2013, then prices increased by 6.3% since On average, the 2009 dollar could buy (6.3/100) or 6.3% more than the April 2013 dollar. The GDP deflator in 1960 was 17.5 On average, the 1960 dollar could buy (100/17.5) or 5.7 times as many goods as the 2009 dollar.

24 GDP Implicit Price Deflator GDP deflator 2011 = 15,534 15,052 GDP deflator 2012 = 16,245 15,471 * 100 = 103 * 100 = 105 Inflation rate between the years of * 100 = 1.9% Nominal GDP 15,534 billion 16,245 billion Real GDP 15,052 billion 15,471 billion

25 GDP Deflator

26 GDP Deflator Percentage Change from Year Ago

27 BEA Press Release Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 2.5 percent in the second quarter of 2013 (that is, from the first quarter to the second quarter), according to the "second" estimate released by the The increase in real GDP in the second quarter primarily reflected positive contributions from personal consumption expenditures (PCE), exports, private inventory investment, nonresidential fixed investment, and residential fixed investment that were partly offset by a negative contribution from federal government spending. Imports, which are a subtraction in the calculation of GDP, increased.

Chapter 20. The Measurement of National Income. In this chapter you will learn to. National Output and Value Added

Chapter 20. The Measurement of National Income. In this chapter you will learn to. National Output and Value Added Chapter 20 The Measurement of National Income In this chapter you will learn to 1. Use the concept of value added to solve the problem of double counting when measuring national income. 2. Describe the

More information

Measuring National Output and National Income

Measuring National Output and National Income Measuring National Output and National Income 6 C H A P T E R O U T L I N E Gross Domestic Product Final Goods and Services Exclusion of Used Goods and Paper Transactions Exclusion of Output Produced Abroad

More information

CHAPTER 5: MEASURING GDP AND ECONOMIC GROWTH

CHAPTER 5: MEASURING GDP AND ECONOMIC GROWTH CHAPTER 5: MEASURING GDP AND ECONOMIC GROWTH Learning Goals for this Chapter: To know what we mean by GDP and to use the circular flow model to explain why GDP equals aggregate expenditure and aggregate

More information

Chapter 8. GDP : Measuring Total Production and Income

Chapter 8. GDP : Measuring Total Production and Income Chapter 8. GDP : Measuring Total Production and Income Instructor: JINKOOK LEE Department of Economics / Texas A&M University ECON 203 502 Principles of Macroeconomics Related Economic Terms Macroeconomics:

More information

Economic Output. Economic Output. GDP: Definition. GDP: Definition. GDP: Definition. GDP: Definition. Agenda. Gross Domestic Product (GDP)

Economic Output. Economic Output. GDP: Definition. GDP: Definition. GDP: Definition. GDP: Definition. Agenda. Gross Domestic Product (GDP) Economic Output Economic Output Agenda Defining GDP Measuring Real GDP The Expenditure Side The Income Side Economic Output Gross Domestic Product (GDP) The official measure of a country s economic output.

More information

Lecture 3: National Income Accounting Reference - Chapter 5. 3) The Income Approach

Lecture 3: National Income Accounting Reference - Chapter 5. 3) The Income Approach Lecture 3: National Income Accounting Reference - Chapter 5 3) The Income Approach The income approach defines GDP in terms of the income derived or created from producing final goods and services. Net

More information

7. Which of the following is a flow variable? A) wealth B) the number unemployed C) government debt D) income

7. Which of the following is a flow variable? A) wealth B) the number unemployed C) government debt D) income Name: Date: 1. GDP is all of the following except the total: A) expenditure of everyone in the economy. B) income of everyone in the economy. C) expenditure on the economy's output of goods and services.

More information

Unit 4: Measuring GDP and Prices

Unit 4: Measuring GDP and Prices Unit 4: Measuring GDP and Prices ECO 120 Global Macroeconomics 1 1.1 Reading Reading Module 10 - pages 106-110 Module 11 1.2 Goals Goals Specific Goals: Understand how to measure a country s output. Learn

More information

Name: Date: 3. Which of the following is a flow variable? A) wealth B) the number unemployed C) government debt D) income

Name: Date: 3. Which of the following is a flow variable? A) wealth B) the number unemployed C) government debt D) income Name: Date: 1. GDP is all of the following except the total: A) expenditure of everyone in the economy. B) income of everyone in the economy. C) expenditure on the economy's output of goods and services.

More information

Chapter 20. The Measurement of National Income

Chapter 20. The Measurement of National Income Chapter 20 The Measurement of National Income National Output and Value Added -many production processes involve multiple stages, only some which are done within the same firm -this raises an important

More information

This is the on-line Multiple Choice Quiz for Chapter 4. Please do the following. Go to the special codes section on your score sheet

This is the on-line Multiple Choice Quiz for Chapter 4. Please do the following. Go to the special codes section on your score sheet Instructions: This is the on-line Multiple Choice Quiz for Chapter 4. Please do the following. Step I - Go to the special codes section on your score sheet Write your section number (1, or 4, or 5) under

More information

6. Real GDP means the value of goods and services is measured in prices. A) current B) actual C) constant D) average

6. Real GDP means the value of goods and services is measured in prices. A) current B) actual C) constant D) average Name: Date: 1. Assume that total output consists of 4 apples and 6 oranges and that apples cost $1 each and oranges cost $0.50 each. In this case, the value of GDP is: A) 10 pieces of fruit. B) $7. C)

More information

Chapter 24. What will you learn in this chapter? Valuing an economy. Measuring the Wealth of Nations

Chapter 24. What will you learn in this chapter? Valuing an economy. Measuring the Wealth of Nations Chapter 24 Measuring the Wealth of Nations 2014 by McGraw-Hill Education 1 What will you learn in this chapter? How to calculate gross domestic product (GDP). Why each component of GDP is important. What

More information

National Income Accounting

National Income Accounting Chapter 2 The Measurement and Structure of the Canadian Economy Economics 282 University of Alberta National Income Accounting The national income accounts is an accounting framework used in measuring

More information

Chapter 2. The Measurement and Structure of the National Economy Pearson Addison-Wesley. All rights reserved

Chapter 2. The Measurement and Structure of the National Economy Pearson Addison-Wesley. All rights reserved Chapter 2 The Measurement and Structure of the National Economy Chapter Outline National Income Accounting: The Measurement of Production, Income, and Expenditure Gross Domestic Product Saving and Wealth

More information

Households Wages, profit, interest, rent = $750. Factor markets. Wages, profit, interest, rent = $750

Households Wages, profit, interest, rent = $750. Factor markets. Wages, profit, interest, rent = $750 KrugmanMacro_SM_Ch07.qxp 11/9/05 4:47 PM Page 87 Tracking the Macroeconomy 1. Below is a simplified circular-flow diagram for the economy of Micronia. a. What is the value of GDP in Micronia? b. What is

More information

GDP: Measuring Total Production and Income

GDP: Measuring Total Production and Income Chapter 7 (19) GDP: Measuring Total Production and Income Chapter Summary While microeconomics is the study of how households and firms make choices, how they interact in markets, and how the government

More information

Measuring a Nation s Income

Measuring a Nation s Income Measuring a Nation s Income I. Review of the Definitions of Microeconomics and Macroeconomics A. Definition of microeconomics: the study of how households and firms make decisions and how they interact

More information

Chapter Outline. Chapter 2. National Income Accounting. National Income Accounting

Chapter Outline. Chapter 2. National Income Accounting. National Income Accounting Chapter 2 The Measurement and Structure of the National Economy Chapter Outline National Income Accounting: The Measurement of Production, Income, and Expenditure Real GDP, Price Indexes, and Inflation

More information

Big Concepts. Measuring U.S. GDP. The Expenditure Approach. Economics 202 Principles Of Macroeconomics

Big Concepts. Measuring U.S. GDP. The Expenditure Approach. Economics 202 Principles Of Macroeconomics Lecture 6 Economics 202 Principles Of Macroeconomics Measuring GDP Professor Yamin Ahmad Real GDP and the Price Level Economic Growth and Welfare Big Concepts Ways to Measure GDP Expenditure Approach Income

More information

CHAPTER 20 GROSS DOMESTIC PRODUCT ACCOUNTING

CHAPTER 20 GROSS DOMESTIC PRODUCT ACCOUNTING CHAPTER 20 GROSS DOMESTIC PRODUCT ACCOUNTING Chapter in a Nutshell Gross domestic product was introduced in the previous chapter as a basic measure of macroeconomic performance. This chapter identifies

More information

Cosumnes River College Principles of Macroeconomics Problem Set 3 Due September 17, 2015

Cosumnes River College Principles of Macroeconomics Problem Set 3 Due September 17, 2015 Cosumnes River College Principles of Macroeconomics Problem Set 3 Due September 17, 2015 Name: Solutions Fall 2015 Prof. Dowell Instructions: Write the answers clearly and concisely on these sheets in

More information

Name (Please print) Assigned Seat. ECO202: PRINCIPLES OF MACROECONOMICS FIRST MIDTERM EXAM SPRING 2011 Prof. Bill Even FORM 1.

Name (Please print) Assigned Seat. ECO202: PRINCIPLES OF MACROECONOMICS FIRST MIDTERM EXAM SPRING 2011 Prof. Bill Even FORM 1. Name (Please print) Assigned Seat ECO202: PRINCIPLES OF MACROECONOMICS FIRST MIDTERM EXAM SPRING 2011 Prof. Bill Even FORM 1 Directions 1. Fill in your scantron with your unique id and form number. Doing

More information

31. Gross Domestic Product equals a. Y = C + I G + NX. b. Y = C I + G + NX. c. Y = C + I + G + NX.

31. Gross Domestic Product equals a. Y = C + I G + NX. b. Y = C I + G + NX. c. Y = C + I + G + NX. GDP Review Questions 13. Gross Domestic Product measures the a. quantity of the goods and services produced in a given year, listed item by item, within a country. b. income of the business sector within

More information

Measuring Economic Performance. Chapter 2

Measuring Economic Performance. Chapter 2 Measuring Economic Performance Chapter 2 Outline Gross Domestic Product Measuring GDP Through Spending Measuring GDP Through Production Measuring GDP Through Income Saving and Investment Transactions with

More information

Pre-Test Chapter 6 ed17 2

Pre-Test Chapter 6 ed17 2 Pre-Test Chapter 6 ed17 2 Multiple Choice Questions 1. (Last Word) The U.S. government agency responsible for compiling the national income accounts is the: A. Census Bureau. B. Bureau of Labor Statistics

More information

Chapter 5: GDP and Economic Growth

Chapter 5: GDP and Economic Growth Chapter 5: GDP and Economic Growth Be Mean Green! Please consider the environment before printing this Chapter Outline. It ll be available online throughout the semester. For Firms private accounting measures

More information

11.1 Estimating Gross Domestic Product (GDP) Objectives

11.1 Estimating Gross Domestic Product (GDP) Objectives 11.1 Estimating Gross Domestic Product (GDP) Objectives Describe what the gross domestic product measures. Learn two ways to calculate the gross domestic product, and explain why they are equivalent. 11.1

More information

The Circular Flow 1/15/2013. Gross Domestic Product: Expenditure and Income

The Circular Flow 1/15/2013. Gross Domestic Product: Expenditure and Income IN THIS CHAPTER, YOU WILL LEARN: ECON 3010 Intermediate Macroeconomics Chapter 2 The Data of Macroeconomics the meaning and measurement of the most important macroeconomic statistics: gross domestic product

More information

Macroeconomics Instructor Miller GDP Practice Problems

Macroeconomics Instructor Miller GDP Practice Problems Macroeconomics Instructor Miller GDP Practice Problems 1. Gross domestic product in the economy is measured by the A) total number of goods and services produced in the economy. B) dollar value of all

More information

MEASURING GDP AND ECONOMIC GROWTH*

MEASURING GDP AND ECONOMIC GROWTH* Chapter 5 MEASURING GDP AND ECONOMIC GROWTH* Gross Domestic Product Topic: GDP 1) Gross domestic product is the total produced within a country in a given time period. A) market value of all final and

More information

The Data of Macroeconomics

The Data of Macroeconomics CHAPTER 2 The Data of Macroeconomics Modified for ECON 2204 by Bob Murphy 2016 Worth Publishers, all rights reserved IN THIS CHAPTER, YOU WILL LEARN:... the meaning and measurement of the most important

More information

Measuring a Nation s Income THE MEASUREMENT OF GROSS DOMESTIC PRODUCT. In this chapter, look for the answers to these questions:

Measuring a Nation s Income THE MEASUREMENT OF GROSS DOMESTIC PRODUCT. In this chapter, look for the answers to these questions: In this chapter, look for the answers to these questions: What is Gross Domestic Product (GDP)? 5 How is GDP related to a nation s total income and spending? What are the components of GDP? How is GDP

More information

Lesson 3 - National Income Accounting

Lesson 3 - National Income Accounting Lesson 3 - National Income Accounting Acknowledgement: Ed Sexton and Kerry Webb were the primary authors of the material contained in this lesson. Section 1 - National Income Accounting History of National

More information

MEASURING GDP AND ECONOMIC GROWTH CHAPTER

MEASURING GDP AND ECONOMIC GROWTH CHAPTER MEASURING GDP AND ECONOMIC GROWTH CHAPTER Objectives After studying this chapter, you will able to Define GDP and use the circular flow model to explain why GDP equals aggregate expenditure and aggregate

More information

Exam 1 Review. 3. A severe recession is called a(n): A) depression. B) deflation. C) exogenous event. D) market-clearing assumption.

Exam 1 Review. 3. A severe recession is called a(n): A) depression. B) deflation. C) exogenous event. D) market-clearing assumption. Exam 1 Review 1. Macroeconomics does not try to answer the question of: A) why do some countries experience rapid growth. B) what is the rate of return on education. C) why do some countries have high

More information

Gross Domestic Product. Will the Canadian economy weaken through the next year and shrink, or will it remain strong and expand?

Gross Domestic Product. Will the Canadian economy weaken through the next year and shrink, or will it remain strong and expand? Will the Canadian economy weaken through the next year and shrink, or will it remain strong and expand? To assess the state of the economy and to make big decisions about business expansion, firms use

More information

ECON300, Spring 2012 Intermediate Macroeconomics Professor: Hui He. Homework 1 Suggested Answer (Total points: 100)

ECON300, Spring 2012 Intermediate Macroeconomics Professor: Hui He. Homework 1 Suggested Answer (Total points: 100) ECON300, Spring 2012 Intermediate Macroeconomics Professor: Hui He Homework 1 Suggested Answer (Total points: 100) Understanding the growth rate and how to measure it Problem no. 1 on page 35. (10 points)

More information

ANSWERS TO END-OF-CHAPTER QUESTIONS

ANSWERS TO END-OF-CHAPTER QUESTIONS ANSWERS TO END-OF-CHAPTER QUESTIONS 7-1 In what ways are national income statistics useful? National income accounting does for the economy as a whole what private accounting does for businesses. Firms

More information

Why expenditure = income. The Circular Flow. Circular flow. Gross Domestic Product

Why expenditure = income. The Circular Flow. Circular flow. Gross Domestic Product Gross Domestic Product Why expenditure = income Two definitions: 1. Total expenditure on final goods and services 2. Total income earned by factors of production In In every transaction, the the buyer

More information

Chapter 5: National Income Accounting John Petroff

Chapter 5: National Income Accounting John Petroff Chapter 5: National Income Accounting John Petroff INTRODUCTION The purpose of this topic is to study how the gross national product is measuring the economic activity of a nation. The concept is defined

More information

NATIONAL INCOME AND PRODUCT ACCOUNTING MEASURING THE MACROECONOMY

NATIONAL INCOME AND PRODUCT ACCOUNTING MEASURING THE MACROECONOMY NATIONAL INCOME AND PRODUCT ACCOUNTING MEASURING THE MACROECONOMY 1. NIPA: GNP and GDP 2. Saving and Wealth 3. Prices and Inflation 4. Unemployment 5. Problems with Measuring the Macroeconomy There are

More information

Reference: Gregory Mankiw s Principles of Macroeconomics, 2 nd edition, Chapters 10 and 11. Gross Domestic Product

Reference: Gregory Mankiw s Principles of Macroeconomics, 2 nd edition, Chapters 10 and 11. Gross Domestic Product Macroeconomics Topic 1: Define and calculate GDP. Understand the difference between real and nominal variables (e.g., GDP, wages, interest rates) and know how to construct a price index. Reference: Gregory

More information

National Income and Balance of Payments Accounting. Chapter 13

National Income and Balance of Payments Accounting. Chapter 13 National Income and Balance of Payments Accounting Chapter 13 Outline GNP Government budget National saving National wealth Balance of payments accounting Gross National Product (GNP) Product Approach

More information

Economics 212 Principles of Macroeconomics Study Guide. David L. Kelly

Economics 212 Principles of Macroeconomics Study Guide. David L. Kelly Economics 212 Principles of Macroeconomics Study Guide David L. Kelly Department of Economics University of Miami Box 248126 Coral Gables, FL 33134 dkelly@miami.edu First Version: Spring, 2006 Current

More information

MEASURING A NATION S INCOME

MEASURING A NATION S INCOME 10 MEASURING A NATION S INCOME WHAT S NEW IN THE FIFTH EDITION: There is more clarification on the GDP deflator. The Case Study on Who Wins at the Olympics? is now an FYI box. LEARNING OBJECTIVES: By the

More information

Introduction to Macroeconomics

Introduction to Macroeconomics Introduction to Macroeconomics Macroeconomics the study of the economy as a whole We measure performance to track the development of the economy Why Measure Performance Helps the government develop tax

More information

4. In the G of the GDP formula why do we not count Welfare and Social Security payments?

4. In the G of the GDP formula why do we not count Welfare and Social Security payments? DUE DATE: NAME: ECONOMIC HEALTH INDICATORS: GDP AND CPI WORKSHEET CHAPTER 11 USE THE ATTACHED NOTES OR THE POWERPOINTS TO ANSWER THE FOLLOWING QUESTIONS.!!!KEEP THE ATTACHED NOTES. DO NOT TURN IN THE NOTES!!!!

More information

Solutions to Week 3 Tutorial Questions (Ch2)

Solutions to Week 3 Tutorial Questions (Ch2) Chapter 2: Q1: Macroeconomics P.51 Review Questions #1 Q2: Macroeconomics P.51 Review Questions #5 Q3: Macroeconomics P.52 Numerical Problems #5 Q4: Macroeconomics P.52 Numerical Problems #6 Q5: Macroeconomics

More information

Lecture 1: Gross Domestic Product

Lecture 1: Gross Domestic Product Lecture 1: Gross Domestic Product August 28, 2014 Prof. Wyatt Brooks MEASURING A NATION S INCOME 0 Structure of the Course First Part of the Class: The macroeconomy in the long run Why are countries rich

More information

Macroeconomics: GDP, GDP Deflator, CPI, & Inflation

Macroeconomics: GDP, GDP Deflator, CPI, & Inflation HOSP 2207 (Economics) Learning Centre Macroeconomics: GDP, GDP Deflator, CPI, & Inflation Macroeconomics is the big picture view of an economy. Microeconomics looks at the market for a specific good, like

More information

The Basics of National Income Accounting. Macroeconomics

The Basics of National Income Accounting. Macroeconomics The Basics of National Income Accounting Macroeconomics National Income Accounting A variety of measures of national income and output are used in economics to estimate total economic activity in a country

More information

Exam 1 Review. Page 1

Exam 1 Review. Page 1 Exam 1 Review 1. When a firm sells a product out of inventory, GDP: A) increases. B) decreases. C) is not changed. D) increases or decreases, depending on the year the product was produced. 2. An economy's

More information

Introduction to Macroeconomics. Sebastian Koch Lauder Business School Summer term 2016

Introduction to Macroeconomics. Sebastian Koch Lauder Business School Summer term 2016 Introduction to Macroeconomics Sebastian Koch Lauder Business School Summer term 2016 Course Outline 2 LBS Intranet CIS Access to course description via LBS Intranet: https://cis.lbs.ac.at/ Check the course

More information

VANCOUVER ISLAND UNIVERSITY. ECON212: PRINCIPLES OF MACROECONOMICS, Spring 2013 SAMPLE MIDTERM EXAM. Name (Last, First): ID #: Signature:

VANCOUVER ISLAND UNIVERSITY. ECON212: PRINCIPLES OF MACROECONOMICS, Spring 2013 SAMPLE MIDTERM EXAM. Name (Last, First): ID #: Signature: Important: Please remember it is a sample exam. Number of questions in each section and structure of questions in section b and c would vary as discussed in class VANCOUVER ISLAND UNIVERSITY ECON212: PRINCIPLES

More information

What is included and excluded in GDP? Differentiate between the income and expenditure approach.

What is included and excluded in GDP? Differentiate between the income and expenditure approach. What is included and excluded in GDP? Differentiate between the income and expenditure approach. Gross DOMESTIC Product GDP official measure of output Market Value of the final goods and services produced

More information

1. A glimpse of the real sector: GDP, inflation rate, macroeconomic identities

1. A glimpse of the real sector: GDP, inflation rate, macroeconomic identities 1. A glimpse of the real sector: GDP, inflation rate, macroeconomic identities 1. Real sector and financial sector Macroeconomics studies the aggregate effects of what people do. Most of what people do

More information

ECONOMIC GROWTH* Chapter. Key Concepts

ECONOMIC GROWTH* Chapter. Key Concepts Chapter 5 MEASURING GDP AND ECONOMIC GROWTH* Key Concepts Gross Domestic Product Gross domestic product, GDP, is the market value of all the final goods and services produced within in a country in a given

More information

Measuring GDP and Economic Growth

Measuring GDP and Economic Growth 20 Measuring GDP and Economic Growth After studying this chapter you will be able to Define GDP and explain why GDP equals aggregate expenditure and aggregate income Explain how Statistics Canada measures

More information

Chapter 11: Activity

Chapter 11: Activity Economics for Managers by Paul Farnham Chapter 11: Measuring Macroeconomic Activity 11.1 Measuring Gross Domestic Product (GDP) GDP: the market value of all currently yproduced final goods and services

More information

Chapter 2 The Measurement and Structure of the National Economy

Chapter 2 The Measurement and Structure of the National Economy Chapter 2 The Measurement and Structure of the National Economy Multiple Choice Questions 1. The three approaches to measuring economic activity are the (a) cost, income, and expenditure approaches. (b)

More information

Economic Indicators -- United Arab Emirates

Economic Indicators -- United Arab Emirates Economic Indicators -- United Arab Emirates United Arab Emirates Middle East & North Africa Gross Domestic Product, 2000 World GDP in million constant 1995 US dollars X 826,705 34,109,900 GDP PPP (million

More information

What is gross domestic product? A lesson

What is gross domestic product? A lesson What is gross domestic product? A lesson Lesson by Chris Cannon, AP macroeconomics teacher, Sandy Creek High School, Tyrone, Georgia Lesson Description This lesson introduces students to the basic concepts

More information

Principles of Macroeconomics Prof. Yamin Ahmad ECON 202 Fall 2004

Principles of Macroeconomics Prof. Yamin Ahmad ECON 202 Fall 2004 Principles of Macroeconomics Prof. Yamin Ahmad ECON 202 Fall 2004 Sample Final Exam Name Id # Part B Instructions: Please answer in the space provided and circle your answer on the question paper as well.

More information

I. Measuring Output: GDP

I. Measuring Output: GDP University of California-Davis Economics 1B-Intro to Macro Handout 3 TA: Jason Lee Email: jawlee@ucdavis.edu I. Measuring Output: GDP As was mentioned earlier, the ability to estimate the amount of production

More information

National Income Accounting. Courtesy : www. carlprosper4nugs.yolasite.com

National Income Accounting. Courtesy : www. carlprosper4nugs.yolasite.com National Income Accounting Courtesy : www. Introduction to Economy of Ghana Measuring the Economy - National Income Accounting Structure of the Economy and Sectoral Outlook Economic History of Ghana: preindependence,

More information

Practice Problems on NIPA and Key Prices

Practice Problems on NIPA and Key Prices Practice Problems on NIPA and Key Prices 1- What are the three approaches to measuring economic activity? Why do they give the same answer? The three approaches to national income accounting are the product

More information

Chapter 24 Measuring Domestic Output and National Income QUESTIONS. 1. In what ways are national income statistics useful? LO1

Chapter 24 Measuring Domestic Output and National Income QUESTIONS. 1. In what ways are national income statistics useful? LO1 Chapter 24 Measuring Domestic Output and National Income QUESTIONS 1. In what ways are national income statistics useful? LO1 Answer: National income accounting does for the economy as a whole what private

More information

Macroeconomics Instructor: Jen Dinsmore Hanson Homework Assignment Chapter 9. Multiple Choice Questions

Macroeconomics Instructor: Jen Dinsmore Hanson Homework Assignment Chapter 9. Multiple Choice Questions Macroeconomics Instructor: Jen Dinsmore Hanson Homework Assignment Chapter 9 Multiple Choice Questions 1. Net domestic product is usually preferred to GDP by economists because net national product A.

More information

CHAPTER 7 Measuring Domestic Output, National Income, and the Price Level

CHAPTER 7 Measuring Domestic Output, National Income, and the Price Level CHAPTER 7 Measuring Domestic Output, National Income, and the Price Level Topic Question numbers 1. GDP concept 1-15 2. C, I, G, and X n components 16-43 3. Investment and the capital stock 44-57 4. GDP

More information

Measuring the Aggregate Economy

Measuring the Aggregate Economy CHAPTER 25 Measuring the Aggregate Economy The government is very keen on amassing statistics... They collect them, add them, raise them to the n th power, take the cube root and prepare wonderful diagrams.

More information

Wages Coconuts 200 Fish 100 Consumption Coconuts 200 Fish 100

Wages Coconuts 200 Fish 100 Consumption Coconuts 200 Fish 100 Chapter 2 Numerical 1 Professor Gilligan Production Coconuts 1000 Fish 500 Gilligan wages Fish 100 Stored coconuts Fertilizer 100 Price 2 coconuts per fish Wages Fish 100 Consumption Fish 100 GDP= Value

More information

Supplement Unit 3. Gross Domestic Product (GDP): What Is It and How Is It Measured?

Supplement Unit 3. Gross Domestic Product (GDP): What Is It and How Is It Measured? 1 Supplement Unit 3. Gross Domestic Product (GDP): What Is It and How Is It Measured? Gross Domestic Product (GDP) is the market value of all final user goods and services produced domestically during

More information

At the end of Chapter 10, you will be able to answer the following:

At the end of Chapter 10, you will be able to answer the following: 1 Objectives for Chapter 10 The Circular Flow Model At the end of Chapter 10, you will be able to answer the following: 1. Explain the basic circular flow model. 2. Define "consumption" and "saving" 3.

More information

Chapter 5 Measuring Economic Activity: GDP and Unemployment

Chapter 5 Measuring Economic Activity: GDP and Unemployment Chapter 5 Measuring Economic Activity: GDP and Unemployment Overview This chapter looks in detail at how economists measure two major macroeconomic variables: gross domestic product (GDP) and the unemployment

More information

25 May Nigerian Gross Domestic Product Report (Expenditure and Income approach) Q3, Q4 2015

25 May Nigerian Gross Domestic Product Report (Expenditure and Income approach) Q3, Q4 2015 25 May 2016 Nigerian Gross Domestic Product Report (Expenditure and Income approach) Q3, Q4 2015 PREFACE This publication provides data on Quarterly Gross Domestic Product (GDP) by the EXPENDITURE and

More information

National Income Accounting

National Income Accounting : A set of rules and definitions for measuring economic activity in the aggregate economy (The economy as a whole.) As we noted earlier, the main measure of aggregate economic activity are GDP and GNP

More information

Chapter 15: Spending, Income and GDP

Chapter 15: Spending, Income and GDP Chapter 15: Spending, Income and GDP By the end of this chapter, you will be able to: Define GDP Calculate GDP by: adding up value added of production. adding up expenditure. adding up income. Distinguish

More information

A. GDP, Economic Growth, and Business Cycles

A. GDP, Economic Growth, and Business Cycles ECON 3023 Hany Fahmy FAll, 2009 Lecture Note: Introduction and Basic Concepts A. GDP, Economic Growth, and Business Cycles A.1. Gross Domestic Product (GDP) de nition and measurement The Gross Domestic

More information

Name: Date: 3. Variables that a model tries to explain are called: A. endogenous. B. exogenous. C. market clearing. D. fixed.

Name: Date: 3. Variables that a model tries to explain are called: A. endogenous. B. exogenous. C. market clearing. D. fixed. Name: Date: 1 A measure of how fast prices are rising is called the: A growth rate of real GDP B inflation rate C unemployment rate D market-clearing rate 2 Compared with a recession, real GDP during a

More information

Chapter 6: Measuring National Output and Income

Chapter 6: Measuring National Output and Income Week 2 Presenter: Jan 25, 2012 Table of Contents 1 Calculating GDP 2 3 Questions Calculating GDP What is the definition of GDP?(2011Mid1 M11; 2011Mid1 M13) What would be included in GDP? intermediate goods?

More information

UNIT I NATIONAL INCOME AND MACROECONOMICS

UNIT I NATIONAL INCOME AND MACROECONOMICS UNIT I NATIONAL INCOME AND MACROECONOMICS 1 National Income National Income is defined as the sum total of all the goods and services produced in a country, in a particular period of time. Normally this

More information

Measuring National Output and National Income. Gross Domestic Product (GDP) Calculating GDP. Gross National Product (GNP) Expenditure Approach

Measuring National Output and National Income. Gross Domestic Product (GDP) Calculating GDP. Gross National Product (GNP) Expenditure Approach Measurg National Output and National Income Chapter 7 Gross Domestic Product (GDP) GDP is the market value of all fal goods and services produced with a given period by factors of production located with

More information

2 Macroeconomics LESSON 2

2 Macroeconomics LESSON 2 2 Macroeconomics LESSON 2 Macroeconomic Goals and GDP Introduction and Description The goals of U.S. macroeconomic policy makers are captured in two laws: the Employment Act of 1946 and the Full Employment

More information

1. GDP includes only sales of good and services to the final pur- Final goods. Newly produced goods

1. GDP includes only sales of good and services to the final pur- Final goods. Newly produced goods 1 Output is normally measured by Gross Domestic Product (GDP), defined as the total market value of all final goods and services produced within an economy in a given period. Output is normally measured

More information

Summer 2014 Week 3 Tutorial Questions (Ch2) Solutions

Summer 2014 Week 3 Tutorial Questions (Ch2) Solutions Chapter 2: Q1: Macroeconomics P.52 Numerical Problems #3 Q2: Macroeconomics P.52 Numerical Problems #6 Q3: Macroeconomics P.53 Numerical Problems #7 Q4: Macroeconomics P.53 Numerical Problems #9 Q5: Macroeconomics

More information

Topic 4: Different approaches to GDP

Topic 4: Different approaches to GDP Topic 4: Different approaches to GDP PRINCIPLES OF MACROECONOMICS Dr. Fidel Gonzalez Department of Economics and Intl. Business Sam Houston State University Three different approaches to measure the GDP

More information

Tracking the Macroeconomy

Tracking the Macroeconomy chapter 7(23) Tracking the Macroeconomy Chapter Objectives Students will learn in this chapter: How economists use aggregate measures to track the performance of the economy. What gross domestic product,

More information

GDP Measuring Output and Income Part II. Alternative Measures Real World Approximations. Reading: RJB for lecture 5

GDP Measuring Output and Income Part II. Alternative Measures Real World Approximations. Reading: RJB for lecture 5 GDP Measuring Output and Income Part II Alternative Measures Real World Approximations Reading: RJB for lecture 5 GDP: Statistical Approximations The Bureau of Economic Analysis (BEA) provides both annual

More information

Week 4 Tutorial Question Solutions (Ch2 & 3)

Week 4 Tutorial Question Solutions (Ch2 & 3) Chapter 2: Q1: Macroeconomics P.52 Numerical Problems #3 part (a) Q2: Macroeconomics P.52 Numerical Problems #5 Chapter 3: Q3: Macroeconomics P.101 Numerical Problems #5 Q4: Macroeconomics P102 Analytical

More information

Chapter 12. National Income Accounting and the Balance of Payments. Slides prepared by Thomas Bishop

Chapter 12. National Income Accounting and the Balance of Payments. Slides prepared by Thomas Bishop Chapter 12 National Income Accounting and the Balance of Payments Slides prepared by Thomas Bishop Preview National income accounts measures of national income measures of value of production measures

More information

Exam 1 ECON 2105 Dr. Susan Laury. Thurs. Feb. 6, :00 p.m. Form B. There are 40 multiple choice questions, worth 2.

Exam 1 ECON 2105 Dr. Susan Laury. Thurs. Feb. 6, :00 p.m. Form B. There are 40 multiple choice questions, worth 2. Exam 1 ECON 2105 Dr. Susan Laury Thurs. Feb. 6, 2003 1:00 p.m. Form B There are 40 multiple choice questions, worth 2.5 points each Please follow these instructions carefully! Feel free to write on this

More information

Macroeconomics, 10e, Global Edition (Parkin) Chapter 24 Finance, Saving, and Investment. 1 Financial Institutions and Financial Markets

Macroeconomics, 10e, Global Edition (Parkin) Chapter 24 Finance, Saving, and Investment. 1 Financial Institutions and Financial Markets Macroeconomics, 10e, Global Edition (Parkin) Chapter 24 Finance, Saving, and Investment 1 Financial Institutions and Financial Markets 1) The term "capital," as used in macroeconomics, refers to A) the

More information

GDP EXPENDITURE REPORT

GDP EXPENDITURE REPORT FEDERAL REPUBLIC OF NIGERIA (The Presidency) GDP EXPENDITURE REPORT 2010 National Bureau of Statistics Plot 762, Independence Avenue, Central Business District, Abuja www.nigerianstat.gov.ng PREFACE This

More information

THE ECONOMY AT FULL EMPLOYMENT: THE CLASSICAL MODEL*

THE ECONOMY AT FULL EMPLOYMENT: THE CLASSICAL MODEL* Chapter 8 THE ECONOMY AT FULL EMPLOYMENT: THE CLASSICAL MODEL* The Classical Model: A Preview Topic: Real Variables 1) Real variables A) are those that determine the cost of living. B) are those that determine

More information

The Gross Domestic Product. September 20, 2009

The Gross Domestic Product. September 20, 2009 The Gross Domestic Product September 20, 2009 Definition 1 GDP: the value of goods and services produced in the domestic economy over a given period of time. Domestic Economy: factors of production (human

More information

Economics. Total marks 100. Section I Pages marks Attempt Questions 1 20 Allow about 35 minutes for this section

Economics. Total marks 100. Section I Pages marks Attempt Questions 1 20 Allow about 35 minutes for this section 2011 HIGHER SCHOOL CERTIFICATE EXAMINATION Economics Total marks 100 Section I Pages 2 8 General Instructions Reading time 5 minutes Working time 3 hours Write using black or blue pen Black pen is preferred

More information

Chapter 12: Gross Domestic Product and Growth Section 1

Chapter 12: Gross Domestic Product and Growth Section 1 Chapter 12: Gross Domestic Product and Growth Section 1 Key Terms national income accounting: a system economists use to collect and organize macroeconomic statistics on production, income, investment,

More information

Chapter 5 Macroeconomic Measurement: The Current Approach Macroeconomics In Context (Goodwin, et al.)

Chapter 5 Macroeconomic Measurement: The Current Approach Macroeconomics In Context (Goodwin, et al.) Chapter 5 Macroeconomic Measurement: The Current Approach Macroeconomics In Context (Goodwin, et al.) Chapter Overview In this chapter, you will be introduced to a fairly standard examination of the National

More information

Introduction to Macroeconomics. TOPIC 1: Introduction, definition, measures

Introduction to Macroeconomics. TOPIC 1: Introduction, definition, measures TOPIC 1: Introduction, definitions, measures Annaïg Morin CBS - Department of Economics August 2013 What is macroeconomics about? Understanding the behavior of an economy as a whole. studying aggregated

More information