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Macroeconomics

Macroeconomics. ECN 3102 CHAPTER 2. Chapter Outline. National Income Accounting: The Measurement of Production, Income, and Expenditure Gross Domestic Product Saving and Wealth Real GDP, Price Indexes, and Inflation Interest Rates. National Income Accounting.

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Macroeconomics

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  1. Macroeconomics ECN 3102 CHAPTER 2

  2. Chapter Outline National Income Accounting: The Measurement of Production, Income, and Expenditure Gross Domestic Product Saving and Wealth Real GDP, Price Indexes, and Inflation Interest Rates

  3. National Income Accounting • Measuring current economic activity

  4. Measurements

  5. Gross Domestic Product • The product approach to measuring GDP • GDP (gross domestic product) is the market value of final goods and services newly produced within a nation during a fixed period of time

  6. Problem -GDP • misses nonmarket items such as homemaking, the value of environmental quality, and natural resource depletion • There is some adjustment to reflect the underground economy • Government services (that aren’t sold in markets) are valued at their cost of production • Newly produced: counts only things produced in the given period; excludes things produced earlier

  7. GDP • Final goods and services • Don’t count intermediate goods and services (those used up in the production of other goods and services in the same period that they themselves were produced) • Final goods & services are those that are not intermediate • Capital goods (goods used to produce other goods) are final goods since they aren’t used up in the same period that they are produced

  8. Gross Domestic Product • GNP vs. GDP • The expenditure approach to measuring GDP • Consumption • Investment • Government purchases of goods and services • Net exports: exports minus imports • The income approach to measuring GDP

  9. Saving and Wealth • Wealth • Measures of aggregate saving

  10. Real GDP, Price Indexes, and Inflation • Real GDP • Price Indexes • Real vs. nominal interest rates

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