Week 3 lecture notes - Macroeconomics
Week 3 lecture notes - Macroeconomics ECON 2105 080
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This 4 page Class Notes was uploaded by Gunawork on Sunday September 13, 2015. The Class Notes belongs to ECON 2105 080 at Georgia State University taught by Brian Hunt in Fall 2015. Since its upload, it has received 66 views. For similar materials see PRINCIPLES OF MACROECONOMICS in Economcs at Georgia State University.
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Date Created: 09/13/15
MacroEcon 2105 Week 3 Lecture Notes Chapter 6 De ning GDP The market value of all nal goods and services produced in a nation within a speci c period of time Functions as a barometer for the economy Sum of output from all economic activity Output becomes income 0 Look at output as income Focus on REAL growth Transfer payment is not government spent National Income wages instant payments rent pro ts Output Total Income Three uses of GDP data Why is GDP useful to examine 1 Estimate living standards across time and nations 2 Measure economic growth 3 Determine whether an economy is experiencing a shortrun expansion or recession Measuring living standards Total GDP May not always be the best standard to compare countries Doesn t adjust for population size of country Per capita GDP GDP per person GDP divided by population Average living standards in a nation 0n the next page you 1 see graphs that demonstrate real GDP per capita Measuring Living Standards Per Capita Real GDP in Six Nations 1950 2008 Per 10000 Poland capita 9000 GDP Turkey in 1990 839Ooo Mexico international 7000 5000 4000 I India 52 000 Nicaragua 1000 439 A i V7 4 Somalia so I l 1950 1960 1970 1980 1990 2000 2010 Per Capita Real GDP in 6 Nations Per 10000 Poland capita 9000 GDP Turkey in 1990 58 000 Mexico international 7000 5000 4000 I INdia SZ OOO Nicaragua 1000 A m 4 Somalia 0 1950 1960 1970 1980 1990 2000 2010 Measuring Economic Growth US Per Capita Real GDP US Per Capita Real GDP 1960 2012 Average 60000 income Per 50000 person 40000 30000 20000 10000 so I I l I I I 1960 1970 1980 1990 2000 2010 The Business Cycle Real GDP Long run trend ofGDP Shortrun path business cycle Trollgh EContractionE Expansion Ti me The peaks and valley of the graph explain the business cycle Peak and Trough is Where the correction is not too steep Business cycle ltgt Real GDP Shortrun uctuations in economic activity that can cause output to be above or below the longrun trend Real GDP is measuring economic growth versus per capita Parts of the business cycle Expansion Contraction Peak Trough A little in ation is good but too much can slow down the economic GROWTH Demand driven GDP counts market value Each quantity was sold at a market value Quantity X Price Market Value Looking closely at how we measure GDP Why does GDP include both goods and services Goods Tangibles Food clothing cars houses Services Intangibles Health care entertainment advice travel banking The composition of our industries and economy has greatly changed over the last 50 years Intermediate versus nal goods Intermediate goods Goods that rms repackage or bundle with other goods to be sold at a later stage Milk sold to a coffee shop Tires sold to a car manufacturer Final goods Goods sold to the final users or consumers To get an accurate GDP estimate and avoid double counting Final goods are included in GDP Intermediate goods are NOT included in GDP NGDP Nominal Gross Domestic Product NGDP Pc Qc