1 TOPIC 1: Introduction, definitions, measures Annaïg Morin CBS - Department of Economics August 2013
2 What is macroeconomics about? Understanding the behavior of an economy as a whole. studying aggregated indicators Taking both a national/regional perspective (closed economy) and an integrated perspective (open economy) Examining many markets (goods, financial, labor), separately and together Looking at what is happening in the short run... Business cycle, some economic policies (fiscal policy, monetary policy...), etc... and in the long run (even though In the long run, we are all dead Keynes) Trend, some economic policies (education, competitiveness, labor market...), etc
3 Why should we care about macroeconomics? For firms: Importance of knowing the economic situation of a region/country Importance of anticipating and assessing government policies that might impact the economic situation of a region/country For everyone: Importance of understanding the world we live in.
5 TOPIC 1: Introduction, definitions, measures Introduction, definitions, measures 1. Aggregate output 1.1. National accounts 1.2. GDP vs. GNP 1.3. Nominal vs. Real GDP 1.4. PPP adjusted GDP 2. HDI 3. Unemployment rate 3.1. Definition 3.2. Who are the unemployed? 3.3. Why to look at the UR? 4. Inflation rate 4.1. How to define the price level? GDP deflator CPI 4.2. Evolution of the inflation rate 5. Trend and Business cycle 5.1. GDP 5.2. Cyclical properties Unemployment Employment Inflation Imports Pro/countercyclical
6 1. Aggregate output 1. Aggregate output 1.1. National accounts 1.2. GDP vs. GNP 1.3. Nominal vs. Real GDP 1.4. PPP adjusted GDP
7 1. Aggregate output Macroeconomics: Understanding the behavior of an economy as a whole How to assess the situation of a country? Most important macroeconomic variables: GDP (Gross Domestic Product): measure of aggregate output GDP per Capita: proxy of the welfare per person
8 1.1. Aggregate output - National accounts National accounts: implementation of accounting techniques for measuring the economic activity of a nation. How to measure GDP? How is GDP constructed? 3 methods: M1. GDP is the value of the final goods and services produced in the economy during a given period. M2. GDP is the sum of value added in the economy during a given period. M3. GDP is the sum of incomes (wages, profits and taxes) in the economy during a given period.
9 1.1. Aggregate output - National accounts Figure: Decomposition of GDP
10 1.1. Aggregate output - National accounts, example Consider an economy composed of only three firms: firms A, B and C. Firms A takes wood in the forest at no cost and produces planks out of this wood. Firms B, a manufacturing company, buys these planks from firm A and produces wardrobes. These wardrobes are sold to firm C, a retailer firm. Firms Quantity Price Wages Profits Firm A 100 planks Firm B 10 wardrobes Firm C 10 wardrobes What is the GDP of this economy?
11 1.1. Aggregate output - National accounts, example Firms Quantity Price Wages Profits Firm A 100 planks Firm B 10 wardrobes Firm C 10 wardrobes M1: GDP is the value of the final goods and services produced in the economy during a given period. GDP = 10*250 = 2500
12 1.1. Aggregate output - National accounts, example Firms Quantity Price Wages Profits Firm A 100 planks Firm B 10 wardrobes Firm C 10 wardrobes M2: GDP is the sum of value added in the economy during a given period. What does value added mean? Value added: value of the production minus value of the intermediate goods that are used in production.
13 1.1. Aggregate output - National accounts, example Firms Quant Price Val of prod Interm costs Wages Profits Firm A 100 planks Firm B 10 wardrobes Firm C 10 wardrobes M2: GDP = (1200-0) + ( ) + ( ) GDP = = 2500
14 1.1. Aggregate output - National accounts, example Firms Quantity Price Wages Profits Firm A 100 planks Firm B 10 wardrobes Firm C 10 wardrobes M3: GDP is the sum of incomes (wages, profits and taxes) in the economy during a given period. GDP = wages in all firms + profits in all firms + taxes GDP = ( ) + ( ) + 0 = 2500 NB: in case the profit is not given, it can be calculated: Profits = revenues - intermediate goods purchases - wages - taxes
15 1.1. Aggregate output - National accounts Technical considerations: The value of exports are included in the value of production. The value of imports must be deducted from the value of production. Taxes should be considered as an income (for the government).
16 1.2. Aggregate output - GDP vs. GNP GDP: is the market value of all final goods and services produced within a country in a given period of time. GNP: is the market value of all the products and services produced in one year by labor and property supplied by the residents of a country. is equal to GDP plus income earned by its citizens (including income of those located abroad), minus income of non-residents located in that country. Substantial difference between GDP & GNP in open economies.
17 1.3. Aggregate output - Nominal vs. Real GDP Nominal GDP: product of the quantities of final goods and their current prices (like in the wardrobe economy example). An increase in nominal GDP can come from both an increase in quantities and from an increase in prices. Important to disentangle the two drivers of the fluctuations in nominal GDP. Real GDP: product of the quantities of final goods and constant prices (reference year prices).
18 1.3. Aggregate output - Nominal vs. Real GDP, example Consider an economy with three goods only. Prices and quantities are the following: Quantities Prices Books Cars Bicycles Books Cars Bicycles What is the nominal GDP for both years and the real GDP for both years referring to 2011 as the base year? Nominal GDP 2011 = 15000*10+100* *100 = Nominal GDP 2012 = 16000*15+125* *104 = Real GDP 2011 = 15000*10+100* *100 = Real GDP 2012 = 16000*10+125* *100 =
19 1.3. Aggregate output - Nominal vs. Real GDP, example NB 1: By construction, nominal GDP = real GDP for the base year. NB 2: Growth rate nominal GDP=( )/ =35,05% Growth rate real GDP=( )/ =22,68% The real GDP growth rate is smaller than the nominal GDP growth rate if there is inflation.
20 1.3. Aggregate output - Nominal vs. Real GDP Which base year to choose? Lets calculate the growth rate of real GDP, taking 2012 as the base year. Real GDP 2011 = 15000*15+100* *104 = Real GDP 2012 = 16000*15+125* *104 = Growth rate real GDP=( )/ = 21,84% The choice of base year affects the levels and growth rate of real GDP. Bureau of Economic Analysis (US): method detailed in Chapter 2 Appendix.
21 1.3. Aggregate output - Nominal vs. Real GDP What increases faster: nominal or real GDP?
22 1.3. Aggregate output - Nominal vs. Real GDP
23 1.3. Aggregate output - Nominal vs. Real GDP Some vocabulary: Nominal GDP Dollar GDP GDP in current dollars Real GDP GDP in terms of goods GDP in constant dollars GDP adjusted for inflation GDP in 1996 dollars
24 1.4. Aggregate output - PPP adjusted GDP How to compare the GDPs of two countries when prices differ in these two countries? Using nominal GDP might lead to wrong conclusions due to the distortion created by price differentials. Needs to take these price differentials into account for international comparison of GDPs PPP adjusted GDP: we calculate real GDP using prices of a base country.
25 2. HDI 2. HDI
26 2. HDI Is GDP a good indicator of the standard of living of a country? Isn t it too narrow to only look at the output of a country? The United Nation developed an index called Human Development Index (HDI) that gathers information about: education life expectancy (proxy for health) GDP per capita It is a index between 0 and 1. It is a weighted average of the 3 components: broader measure, better assessment of human well-being.
27 2. HDI: HDI 2009 (Martin Lewis, UN data)
28 2. HDI: HDI and GDP per capita 2009 (Martin Lewis, UN data)
30 2. HDI HDI vs. GDP We do not loose much by focusing on GDP as the correlation between GDP and HDI is very high (around 0.85), which means that ordering countries based on HDI would give a very similar picture that ordering the countries based on GDP per capita.
31 3. Unemployment rate 3. Unemployment rate 3.1. Definition 3.2. Who are the unemployed? 3.3. Why to look at the UR?
32 3.1. Unemployment rate - Definition The GDP (and GDP per capita) is not the only variable under scrutiny. Another important variable is the unemployment rate. labor force = employed + unemployed unemployment rate = unemployed / labor force NB: the employment rate and the unemployment rate do not sum to 1. employment rate = employed / population population = labor force + out of the labor force
33 3.2. Unemployment rate - Who are the unemployed? In most countries, the criteria for being unemployed are not to have a job to be looking for a job An individual who has no job and is not looking for a job is classified as out of the labor force. The flows in and out the labor force should not be disregarded as they give a lot of information. For example, the flow out of the labor force generally increases in periods of recession as many discouraged individuals stop looking for jobs.
34 3.3. Unemployment rate - Why to look at the UR? The unemployment rate gives information on the level of activity. Negative relation between the unemployment rate and GDP per capita. Correlation =
35 3.3. Unemployment rate - Why to look at the UR? The unemployment rate gives information on the level of activity. Okun s law: Clear relation between the change in the unemployment rate and GDP growth. High output growth generally associated with a decrease in the unemployment rate. Low output growth generally associated with an increase in the unemployment rate. Intuition: High output growth, increase in production, more hiring, less unemployment.
36 3.3. Unemployment rate - Why to look at the UR? Okun s law. Source: Owyang and Sekhposyan 2012
37 3.3. Unemployment rate - Why to look at the UR? Social implications of unemployment: financial and psychological suffering, isolation... Unemployment negatively impacts well-being.
38 4. Inflation rate 4. Inflation rate 4.1. How to define the price level? GDP deflator CPI 4.2. Evolution of the inflation rate
39 4. Inflation rate Another macro variable often examined: the inflation rate. The inflation rate is the rate at which the price level increases. Why is it important to look at the inflation rate? In periods of inflation, not all wages rise proportionally. Some rise as much, some less, some much less, (few more!). Therefore, inflation modifies the structure on income and might lead to the impoverishment of some people. In periods of inflation, not all prices rise proportionally. It creates distortions and increases uncertainty. In periods of high inflation, the rate of inflation is often unpredictable by individuals. This increases uncertainty, makes investment decisions harder and therefore lowers investment.
40 4.1. Inflation - How to define the price level? Macroeconomists typically look at 2 measures of the price level: GDP deflator Consumer Price Index (CPI)
41 Inflation - GDP deflator Definition: GDP deflator = nominal GDP real GDP Therefore, when the price level is measured by the GDP deflator: Inflation rate = growth rate of the GDP deflator
42 Inflation - GDP deflator Lets consider again the economy we look at before, with prices and quantities being the following: Quantities Prices Books Cars Bicycles Books Cars Bicycles Nominal GDP 2011 = Nominal GDP 2012 = Real GDP 2011 = Real GDP 2012 = What is the inflation rate as defined by the growth rate of the GDP deflator? GDP deflator 2011 = 1 GDP deflator 2012 = / = 1,1008 The inflation rate is 10,08%.
43 Inflation - CPI The GDP deflator is the average price of the final goods produced in an economy. But consumers care more about the average price of consumed goods (which might differ from the produced ones). Macroeconomists constructed a Consumer Price Index (CPI) which gives the cost of a specific list of goods and services (representative of the consumption basket of a typical urban consumer). The CPI is set to 1 in the period chosen as the reference period. When the price level is measured by the CPI: Inflation rate = growth rate of the CPI
44 Inflation - CPI Lets consider again the same economy. Let say that the representative consumption basket is 10 books, one car and 2 bicycles is set to be the base year. Quantities Prices Books Cars Bicycles Books Cars Bicycles CPI 2011 = 1 CPI 2012 = Value of the consumption basket in 2012 / Value of the consumption basket in the base year CPI 2012 = [(10*15)+(1*10500)+(2*104)]/[(10*10)+(1*10000)+(2*100)]= The inflation rate is 5,42%.
45 3.2. The evolution of the inflation rate Source: Mankiw 2009
46 5. Trend and Business cycle 5. Trend and Business cycle 5.1. GDP 5.2. Cyclical properties Unemployment Employment Inflation Imports Pro/countercyclical
47 5. Trend and Business cycle 3 main variables of interest: Real GDP per capita Unemployment rate Inflation rate How do these variables evolve, in the short run and in the long run?
48 5.1. Trend and Business cycle - GDP
49 5.1. Trend and Business cycle - GDP It is important to disentangle the cyclical component from the trend. Why? different forces behind the slope of the trend and the cyclical movements.
50 5.1. Trend and Business cycle - GDP The business cycle is the upward and downward movements of levels of GDP and refers to the period of expansions and contractions in the level of economic activities (business fluctuations) around its long-term growth trend.
51 5.1. Trend and Business cycle - GDP In this course, we will mostly study what happens in the short run. Lets remove the trend. How? By looking only at the difference between the GDP series and the trend, or by looking at the GDP growth rate.
52 5.2. Trend and Business cycle - Cyclical properties In this course, we will mainly focus on the short run. In the short run, what matters are the cyclical movements of macroeconomic variables. The main variable under scrutiny is real GDP per capita because its cyclical movements define business cycles. How are the unemployment rate and the inflation rate related to the cyclical movements of GDP?
53 5.2. Trend and Business cycle - Cyclical properties Economic variables show comovement they have regular and predictable patterns of behavior over the course of the business cycle A variable is procyclical when its cyclical component is positively correlated with the cyclical component of GDP. That is, any quantity that tends to increase in periods of expansion and to decrease in periods of recessions is classified as procyclical. A variable is countercyclical when its cyclical component is negatively correlated with the cyclical component of GDP. A countercyclical economic indicator is one which cycle moves in the opposite direction as the business cycle. A variable is acyclical when it is not correlated with GDP.
54 Trend and Business cycle - Cyclical properties of unemployment
55 Trend and Business cycle - Cyclical properties of employment Source: FRB Philadelphia National Leading Index. GDP = Real GDP growth
56 Trend and Business cycle - Cyclical properties of inflation Shaded areas: recessions as defined by the National Bureau of Economic Research
57 Trend and Business cycle - Cyclical properties of imports Imports and GDP. Percentage deviation from trend. Source: FRB Philadelphia
58 Trend and Business cycle - Pro/countercyclical Procyclical: Inflation Real consumer spending Investment Financial variables (stock and bond prices) Importations Employment... Countercyclical: Unemployment and unemployment rate...
59 Exercise - Calculating GDP Consider the following economy in which only two firms operate. The activities of the two firms can be summarized as follows: Firm A Costs Revenues Wages 120 Exports 110 Purchases from B 100 Sales to B 200 Sales to the public 600 Firm B Costs Revenues Wages 200 Sales to A 100 Purchases from A 200 Sales to public 400 Taxes 100 Compute GDP for this economy using the three possible definitions.
60 Exercise - Calculating inflation using the GDP deflator and the CPI A country produces the following final goods: bananas, mobile phones, and umbrellas. The statistics agency reports the following data: Year Products Quantity produced Unit price 2011 Bananas Mobile phones Umbrellas Bananas Mobile phones Umbrellas a) Compute the inflation rate in the period using the GDP deflator, taking 2011 as the base year. b) The representative bundle of goods is composed of 10 bananas and 2 mobile phones (the production of umbrellas is entirely exported because of the country s dry climate). Compute the inflation rate during using the consumer price index (CPI), taking 2011 as the base year. How can you explain the differences compared with a)?
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
Economics 2 Spring 2016 Professor Christina Romer Professor David Romer LECTURE 17 MACROECONOMIC VARIABLES AND ISSUES March 17, 2016 I. MACROECONOMICS VERSUS MICROECONOMICS II. REAL GDP A. Definition B.
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
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
Macroeconomia Capitolo 7 Seguire l andamento della macroeconomia PowerPoint Slides by Can Erbil 2006 Worth Publishers, all rights reserved What you will learn in this chapter: How economists use aggregate
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
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
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
Agenda What is a Business Cycle? Business Cycles.. 11-1 11-2 Business cycles are the short-run fluctuations in aggregate economic activity around its long-run growth path. Y Time 11-3 11-4 1 Components
Chapter 2: Key Macroeconomics Variables ECON2 (Spring 20) 2 & 4.3.20 (Tutorial ) National income accounting Gross domestic product (GDP): The market value of all final goods and services produced within
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
CHAPTER 7: AGGREGATE DEMAND AND AGGREGATE SUPPLY Learning goals of this chapter: What forces bring persistent and rapid expansion of real GDP? What causes inflation? Why do we have business cycles? How
Chapter 13. Aggregate Demand and Aggregate Supply Analysis Instructor: JINKOOK LEE Department of Economics / Texas A&M University ECON 203 502 Principles of Macroeconomics In the short run, real GDP and
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
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:
EC201 Intermediate Macroeconomics EC201 Intermediate Macroeconomics Problem Set 1 Solution 1) Given the difference between Gross Domestic Product and Gross National Product for a given economy: a) Provide
University of California-Davis Economics 1B-Intro to Macro Handout 8 TA: Jason Lee Email: firstname.lastname@example.org I. Introduction to Aggregate Demand/Aggregate Supply Model In this chapter we develop a model
Chapter 7 AGGREGATE SUPPLY AND AGGREGATE DEMAND* Key Concepts Aggregate Supply The aggregate production function shows that the quantity of real GDP (Y ) supplied depends on the quantity of labor (L ),
Part I. True/False/Uncertain Justify your answer with a short argument. 14.02 Principles of Macroeconomics Problem Set 1 Fall 2005 ***Solution*** Posted: Monday, September 12, 2005 Due: Wednesday, September
INTRODUCTION TO MACROECONOMICS MIDTERM- SAMPLE QUESTIONS MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) In May 2009, Ford Motor Company's sales
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
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
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
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
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
HW 2 Macroeconomics 102 Due on 06/12 1.What are the three important macroeconomic goals about which most economists, and society at large, agree? a. economic growth, full employment, and low interest rates
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
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
33 Aggregate Demand and Aggregate Supply R I N C I L E S O F ECONOMICS FOURTH EDITION N. GREGOR MANKIW Long run v.s. short run Long run growth: what determines long-run output (and the related employment
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
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
A HOW-TO GUIDE: UNDERSTANDING AND MEASURING INFLATION By Jim Stanford Canadian Centre for Policy Alternatives, 2008 Non-commercial use and reproduction, with appropriate citation, is authorized. This guide
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.
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
EC2105, Professor Laury EXAM 2, FORM A (3/13/02) Print Your Name: ID Number: Multiple Choice (32 questions, 2.5 points each; 80 points total). Clearly indicate (by circling) the ONE BEST response to each
Economics 1021, Section 1 Prof. Steve Fazzari Solutions to Problem Set #2 Spring, 2013 1.a) Units of Price of Nominal GDP Real Year Stuff Produced Stuff GDP Deflator GDP 2003 500 $20 $10,000 95.2 $10,504
Econ 111 Summer 2007 Final Exam Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The classical dichotomy allows us to explore economic growth
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
Name: Real vs. Nominal GDP Practice Period: Real verse Nominal Values Prices in an economy do not stay the same. Over time the price level changes (i.e., there is inflation or deflation). A change in the
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
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,
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
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,
CH 10 - REVIEW QUESTIONS 1. The short-run aggregate supply curve is horizontal at: A) a level of output determined by aggregate demand. B) the natural level of output. C) the level of output at which the
By Jennifer Castle of Oxford University and Colin Ellis of the Bank s Structural Economic Analysis Division. (1) The Bank s Monetary Policy Committee analyses a wide variety of data to inform its monetary
2 Comparing Levels of Development Countries are unequally endowed with natural capital. For example, some benefit from fertile agricultural soils, while others have to put a lot of effort into artificial
Econ 202 Final Exam 1. If inflation expectations rise, the short-run Phillips curve shifts a. right, so that at any inflation rate unemployment is higher. b. left, so that at any inflation rate unemployment
roblem Set #4: Aggregate Supply and Aggregate Demand Econ 100B: Intermediate Macroeconomics 1) Explain the differences between demand-pull inflation and cost-push inflation. Demand-pull inflation results
University of California-Davis Economics 1B-Intro to Macro Handout 3 TA: Jason Lee Email: email@example.com I. Measuring Output: GDP As was mentioned earlier, the ability to estimate the amount of production
15 In this chapter, look for the answers to these questions: What are economic fluctuations? What are their characteristics? How does the model of demand and explain economic fluctuations? Why does the
Macroeconomics 2301 Potential questions and study guide for exam 2 Any 6 of these questions could be on your exam! 1. GDP is a key concept in Macroeconomics. a. What is the definition of GDP? b. List and
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
CHAPTER 8 Practise Problems 1. The labor force is: A) the total of people employed. B) the total population. C) the total of the population of working age. D) the total of people employed and unemployed.
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)
European Economic and Social Committee Brussels, 8 October 2012 12th EU-China Round Table Report on Surpassing GDP: The New Version of Human Development Index Rapporteur: He Chuanqi, China Center for Modernization
ECON 410.502 Macroeconomic Theory Spring 2010 Instructor: Guangyi Ma Extra Problems #3 Notice: (1) There are 25 multiple-choice problems covering Chapter 6, 9, 10, 11. These problems are not homework and
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
BADM 527, Fall 2013 Name: Midterm Exam 2 November 7, 2013 Multiple Choice: 3 points each. Answer the questions on the separate bubble sheet. NAME 1. According to classical theory, national income (Real
1 Objectives for Chapter 9 Aggregate Demand and Aggregate Supply At the end of Chapter 9, you will be able to answer the following: 1. Explain what is meant by aggregate demand? 2. Name the four categories
The Circular Flow of Income and Expenditure Imports HOUSEHOLDS Savings Taxation Govt Exp OTHER ECONOMIES GOVERNMENT FINANCIAL INSTITUTIONS Factor Incomes Taxation Govt Exp Consumer Exp Exports FIRMS Capital
Chapter 12 Unemployment and Inflation Multiple Choice Questions 1. The origin of the idea of a trade-off between inflation and unemployment was a 1958 article by (a) A.W. Phillips. (b) Edmund Phelps. (c)
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
The AD-AS Model The Aggregate Demand- Aggregate Supply (AD-AS) Model Chapter 9 The AD-AS Model addresses two deficiencies of the AE Model: No explicit modeling of aggregate supply. Fixed price level. 2
Chap 11 & 12 Chap 10: Measuring a Nation s Income: GDP, Nominal GDP, Real GDP, and GDP Deflator Next topic: Chap 11: Measuring the Cost of Living: CPI GDP from an whole economy point of view CPI from a
LECTURE NOTES ON MACROECONOMIC PRINCIPLES Peter Ireland Department of Economics Boston College firstname.lastname@example.org http://www2.bc.edu/peter-ireland/ec132.html Copyright (c) 2013 by Peter Ireland. Redistribution
1. An open economy is one in which: A) the level of output is fixed. B) government spending exceeds revenues. C) the national interest rate equals the world interest rate. D) there is trade in goods and
Lesson 8 - Aggregate Demand and Aggregate Supply Acknowledgement: Ed Sexton and Kerry Webb were the primary authors of the material contained in this lesson. Section 1: Aggregate Demand The second macroeconomic
The Fiscal Policy and The Monetary Policy Ing. Mansoor Maitah Ph.D. Government in the Economy The Government and Fiscal Policy Fiscal Policy changes in taxes and spending that affect the level of GDP to
Edmonds Community College Macroeconomic Principles ECON 202C - Winter 2011 Online Course Instructor: Andy Williams Textbooks: Economics: Principles, Problems and Policies, 18th Edition, by McConnell, Brue,
Unemployment and Inflation Unemployment Inflation Costs of Unemployment Personal Cost Loss of income Loss of self-esteem Increase in stress related psychological problems Increase in incidence of crime,
BANK OF FINLAND Monetary Policy and Research - Financial Markets and Statistics Main Indicators for the Finnish Economy 1/11 January 1 January 11 Monetary Policy and Research - Financial Markets and Statistics
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
BANK OF FINLAND Monetary Policy and Research - Financial Markets and Statistics Main Indicators for the Finnish Economy 3/11 17 March 11 Main Indicators for the Finnish Economy is produced jointly by the
Answers to Text Questions and Problems Chapter 22 Answers to Review Questions 3. In general, producers of durable goods are affected most by recessions while producers of nondurables (like food) and services
A HOW-TO GUIDE: FINDING AND INTERPRETING GDP STATISTICS By Jim Stanford Canadian Centre for Policy Alternatives, 2008 Non-commercial use and reproduction, with appropriate citation, is authorized. This
26 Aggregate Supply and Aggregate Demand Learning Objectives Explain what determines aggregate supply Explain what determines aggregate demand Explain what determines real GDP and the price level and how
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
Competency: Basic Economic Concepts and Principles 1. Define money (characteristics, role, and forms) and trace how money and resources flow through the American economic system. 2. Utilize decision-making
Douglas, Fall 2009 December 15, 2009 A: Special Code 00004 PLEDGE: I have neither given nor received unauthorized help on this exam. SIGNED: PRINT NAME: Econ 202 Section 4 Final Exam 1. Oceania buys $40
BANK OF FINLAND Monetary Policy and Research - Financial Markets and Statistics Main Indicators for the Finnish Economy /1 13 April 1 13 April 1 Monetary Policy and Research - Financial Markets and Statistics