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Drexel - ECON 202 - ECON 202 - Week 2 - Lecture Notes - Class Notes

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> > > > Drexel - ECON 202 - ECON 202 - Week 2 - Lecture Notes - Class Notes
background image Business Cycle Fluctuations Graph Time Y N  = Nominal GDP Y = Real GDP GDP = Gross Domestic Product o It’s important to remember that when determining a country’s GDP we  only care about Y, or the Real GDP o Why? Y or Real GDP shows the actual growth of a country through how  much it produces o What is the difference? The difference is that Nominal GDP typically  turns out an inflated percentage of growth compared to real GDP 
because it takes into account the price increases for a product as well 
as how much more of a product was produced or sold 
Y (GDP) What does Aggregate mean? In the case of macroeconomics we focus on 
Aggregate Supply and Aggregate Demand. This means that Aggregate Supply
are all the companies inclusive to all the markets in that country who supply 
a good or service to a customer. Aggregate Demand are all the consumers in 
that country who have a desire to purchase that service or good. 
Recap: Difference between macro and micro: 
background image o macro- we are concerned about aggregate supply and aggregate  demand; aggregate demand which means inclusive of all markets or 
customers/clients/etc in the US; aggregate supply all firms who 
produce a good or service in an economy.
o X axis in macro – aggregate quantity(GDP of a country)
o Y axis in macro – price level (cost of living in a country)
o Economic growth is through the change in GDP
o Inflation is the rate of change in prices
There are many different currencies, how do we measure each countries 
GDP?
o GDP is measured in terms of the countries currency
o When comparing a country’s GDP to another their GDP is converted to 
the dollar currency as a basis for comparison Price Levels o Representative basket = average people, not exactly the closest  measure but as close as you can get compared to if you used the top 
1% because they are not your “average” person
      Y (GDP)   How does GDP grow? Above you can see that if we shift demand to the right there will be an 
increase in Y (GDP) as well as a price increase. From this graph we can see 
the occurrence of inflation where price levels increase

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School: Drexel University
Department: Economics
Course: Principles of Macroeconomics
Professor: Petar Dobrev
Term: Winter 2019
Tags: CPI inflation PPI
Name: ECON 202 - Week 2 - Lecture Notes
Description: Macroeconomic Indicators: Goals and Policies
Uploaded: 01/16/2019
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School: Drexel University
Department: Economics
Course: Principles of Macroeconomics
Professor: Petar Dobrev
Term: Winter 2019
Tags: CPI inflation PPI
Name: ECON 202 - Week 2 - Lecture Notes
Description: Macroeconomic Indicators: Goals and Policies
Uploaded: 01/16/2019