Chapter 5 Macro
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This 6 page Class Notes was uploaded by Jessica D'Aniello on Monday September 28, 2015. The Class Notes belongs to Econ 105 at Pace University taught by Prof Weinstock in Fall 2015. Since its upload, it has received 34 views. For similar materials see Macroeconomics 105 in Economcs at Pace University.
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Date Created: 09/28/15
Chapter 5 Macro MEASURING A NATION39S PRODUCTION AND INCOME GDP gross domestic products Describe the steps from gap to income Expenditures and income earned by the entire economy Increase GDP make more stuff to have a better economy Some facts GDP over the past 5 years have been growing 22 tempered or moderate From 20082009 the gdp dropped 4 If the economy s GDP went up to 5 there would be in ation The study of the nation s economy as a whole focuses on the issues of in ation unemployment and economic growth sustained increases in the average prices of all goods and services when in ation is slowing down still above 0 when in ation is going down below 0 deals with supply and demand and goods sold and bought purchases and revenue and income paid to factors purchases of newly produced goods and services by households purchases of newly produced goods and services by rms the banks the bond markets that credit credit so the real economy can grow if they go wrong could effect the real economy the total market value of nal goods and services produced within an economy in a given yeah goods used in the production process that are not nal goods and services GNP gross NATIONAL product worldwide Question will be on midterm Why is there a signi cant divergent between the Philippines There is a signi cant separation between the GDP and the GNP in the Philippines because everyone leaves the country to go work somewhere else so they have a very low GDP because no one is there REALNOMIAL PRINCIPLE What matters to people is the real value of money or income its purchasing power not the face value of money or income a measure of GDP that controls for changes in pnces the value of GDP in current dollars sustained increases in the real GDP of an economy over a long period of time total output of the country divided by the number of people in the country The Components of GDP N 39 Consumption expenditures purchases by consumers Private investment expenditures purchases by rms nothing to do with stocks and bonds but they are used to have the credit to investment spending Government purchases purchases by federal state and local governments Net Exports net purchases by the foreign sector domestic exports minus domestic imports capacity to last at least 3 years last only a little while colleges marketing business etc positive sign in the economy total new investment expenditures reduction in the value of capital goods over a oneyear period due to physical wear tear and also to obsolescence also called capital consumption allowance gross investment minus depreciation Net investment is a fragile thing purchases of newly produced goods and services by local state and federal governments payments from governments to individuals that do no correspond to the production of goods and services Not included in GDP exports minus imports the excess of imports over exports the excess of exports over imports Strong currency bad exports Weak currency good exports Equation for GDP YCGNX YGDP C Consumption l Investment 6 Government purchases NX Net exports GDP consumption investment government purchases net exports Measuring National Income the total income earned by a nation s residents both domestically and abroad in the production of goods and services GDP plus net income earned abroad GNP and national income should match up income including transfer payments received by households personal income that households retain after paying income taxes Net national product gross national product depreciation Value added the sum of all the income wages interest pro ts and rent generated by an organization Look at circular ow could you draw the nancial into circular ow How to use the GDP de ator an index that measures the prices of domestically produced goods and services included in GDP change over time GDP de ator Nominal GDP divided Real GDP x 100 a method for calculating changes in prices that uses an average of base years from neighboring years Fluctuations in GDP Recessions can be illustrated by peaks troughs and an expansion phase The date at which the recession states and output begins to fall is called the peak The date at which the recession ends and outputs begins to rise is called the through The expansions phase begins after the tough The 20072009 recession began in December 2007 and ended in June 2009 commonly de ned as six consecutive months of declining real GDP the common name for a severe an economy moving from command economy to more of a market economy emerging markets
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