Week 4 lecture notes - Macroeconomics
Week 4 lecture notes - Macroeconomics ECON 2105 080
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This 4 page Class Notes was uploaded by Gunawork on Sunday September 20, 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 25 views. For similar materials see PRINCIPLES OF MACROECONOMICS in Economcs at Georgia State University.
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Date Created: 09/20/15
MacroEcon 2105 Week 4 Lecture Notes Chapter 6 Looking closely at how we measure GDP Quantity X Price Market Value Total GDP National Output Form of dividend Expenditures Looking at GDP as different types of expenditures The Bureau of Economic analysis BEA is the US government agency that tallies GDP data a task is called national income accounting Consumption driven economy GDPCIGNX NX is export import C consumption Durable goods Nondurable goods Services this is a blessing I investment Plant equipment Inventory investment what we produce New residential housing stats G government purchases Defense goods Nondefense goods Federal State amp local NX net exports Exports Imports Trade de cit Real vs Nominal GDP Real GDP measures with prices held constant over time Nominal GDP measured current prices Price level an index to measure prices of goods and services in an economy GDP de ator a measure of the price level that includes prices of nal goods and services in GDP Used to de ate out in ation from nominal GDP so we can nd real GDP Nominal NGDP PX QX Py Qy P11 Q11 P price Q quantity Real Base period RGDPcy PXBy QyCy PyBy QyCy PnBy Qncy Real growth looks at purchasing power Focus on raising residual income than in ation Finding Real GDP Real GDPt NorflmalGDPt x100 Pr1ce Levelt Example Find Real GDP for 2010 2010 GDP in 2005 prices Fill in equation use t 2010 numbers from table Real GDP2010 mi x 100 130869 trillion Growth Rates Tell us how fast our economy is growing Can be calculated using a percent change formula A negative growth rate means the economy is contracting GDonlo GDP2009 Nominal GDP growth in 2010 x 100 2009 Other useful evaluative formulas A Real GDP A Price Level A Nominal GDP PR Vpresent Vpast Vpast X 100 PR percent rate gt Vpresent present or future value gt Vpast past or present value Shortcomings of GDP gt During recessions wages go down Nonmarket goods Think about goods and services produced but never sold even though they create value for society Washing dishes mowing a lawn In lessdeveloped societies where houses produce many of their own goods GDP may be a poor measure of economic output Underground economy Hidden uncounted transactions Sometimes legal Waitress tips landscaper cuts a lawn Sometimes illegal Exchanges of narcotics Size of underground economy 10 of GDP estimated in United States 45 in developing countries Smaller in United States due to stronger economy and less corruption The Quality of the Environment GDP is unable to distinguish how goods are produced Country A 10 million units of output Clean energy clean air Country B 10 million unit of output No environmental standards health problems Equal GDP but is wellbeing the same Leisure time GDP does not capture how long it takes to produce goods and services Average work week South Korea 46 hours per week Netherlands 28 hours USA 36 hours Japan 36 hours Alternative measures of economic wellbeing Other measures of wellbeing Life expectancy Education levels Access to healthcare Crime rates Environmental quality 0 Reality Alternative measures dif cult to quantify GDP is correlated with most of these other measures anyway Conclusion of Chp 6 Gross Domestic Product GDP The market value of all nal goods and services produced in a nation within a speci c period of time To nd real GDP we must adjust nominal GDP for in ation 0 Business Cycle Shortrun uctuations in economic activity that can cause output to be above or below the longrun trend Chapter 7 Unemployment the lecture will continue in week 5 Big questions What are the major reasons for unemployment What can we learn from unemployment data policy induced How does the market reapply people w nominal wage Real wage w price level As the coef cient goes up the denominator goes down
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