Macroeconomics : study of the economy as a whole
↳ focus on
aggregated variables
Economy =
System of trace
↳ grovides as indication on the cerdition of the
economy of goods and services. O in a
society
as a whole
variables Macro-economy
revenues
:
income of (Measure of
·
National >
- sum production economic ablity
·
Economic growth & growth in national incere [increase in r .
GDP]
level
Inflation
· >
- change in
aggregale price
·
unemployment & incidence of worked losing jobs & policymakers are concerned about
·
InternationalTrade - (x-N) - not execb
* As firs fire national income increases
grow over .
Firm revenue & = Nominal GDP &
Economic
growth -
change in r .
GDP/in national incere
when economy
is
growing of grath is
positive and
cremployers is falling
↳ Developing economies fend to
grow
at a
faster rate
.
at slower rate
older
a
* This is due to economic volatility economics grow
↳ Price is orglable
can care social unrest
>
-
Unemployment iscydicubecausegruthi cica empym dredele
a
* unemployment rides when
growth falls
y key fader
in policy making
price stability
is to
Economic
policy used acheive .
business + confidence growth
· Inflation causes lover export competitiveness , decreases consumer
,
lover
more unemployment
national incove GDP (gross domestic product)
Measuring
:
method I Sum of all production
· output
·
Income method I Sum of all incove
methed
a of all
· Experditie sun
expenditure
, Method Adds
Output :
of all
the prices and quantities
GVA value added
To fix the problem of double caling - Sum of final goods or (gross
valued
· governions activity is as cast
↳ sum of sales -
Sum of intermediate
· ownershing of houses include inpuled rent
grod
GDP
·
taxes such as rAF are only included In an market prices
occurs when
double conting
of
Incure methed : Income of all factors of production there are
multiple steps
· Wages and Sultrie (labour prediction
·
Prehb Centrepreneurship
:
·
Rent Clud)
Interest
· (Gayikall Impulika rent value placed on an
Transfer asset obred
· paynen's are excluded
6
Expenditure method : GDP = c + 1 * G + (x N) -
y= 0
F -
basically All
model of expenditure
GNP = Gross national preduct : GNP = GDP + ret incre
from abroad
Net national product ONNP) : Nip = GNP-depreciation
circular flow of income another
to one
- All equal
at the
Produchun I because they flow
same
.
rale
firms X
= each alter
incere
C & ext erditure *
to
Income flow
experditie flow
is equal
Households
save flow of
money
in the economy
is nomiral value
Money a
·
Nominal GDP measures value of final goods using current prices
·
Real GDP Measures these values using the prices of a base year
& multiply & by base year griva
area it sure
quarties of output I
We
changes in Nominal GDP can be due to changes in price or .
which caused
real GDP be due to changes in quantity
.
changes In can only
↳ eliminates affect of inflation
, Actual
growth vs potential growth :
Actual growth - increase in actual observed
·
output
Potential
·
output - increase in economy's capacity
Actual growth flackcales around putential outout (ty)
due
fluctuations to changes + Shocks
S
↳ economic in AD
represented on business cycle.
r . GDP
capacity
Economic
Cauy)
normal output
u short-run fluckalich
=
of the eccrory
7 time
O
z
Long-term economic
growth :
Production function : Y = FCK , (51bru
capital
Long-term growth =
> increase in to
seconomic capacity
diminishes
·
As labour keeps increasing -> eventually produclinty
↳ due to overcrowding= law of diminishing returns.
Productinly =
output per
worker
Factor labour
productivity : Marginal prod of
MPL = ecluye of production function Y = FC
MPL & = ) long-term economic
growth (yea)
Demand-side policies : (Short-run Supply-side policy Clury-run) :
feeding fiscul evlicy policies
in
·
increase goul ·
labour market
· lowering taxes ·
increasing technology
·
murchery policy ·
encouraging
investment
, Sustainable
growth :
·
critical planetary brundaries Woled (biodimsly) by needs of socibly
↳ depletion of commun pool resources
An ennronmental ceiling exist to identify violation .
·
berclib of economic
grah
: sesb of economic growth ,
increased consumption general extra was
· ·
may
reduction of aler macro
problems distribution of incere
· o
regulite
· scape for redistribution o environmental casy
batter living strderds &
·
mere income =
schepletion resucrees
Reasonable growth- same as inflation (2 5%)
.
to high great -f unostainable
high inflation
Inflation can come back
inflation
↳ stagflation = low
growth thigh
3 Chigh VE)
Inflution is
explosive - in can
grow rapidly
driven
·
Prices are by expectation
Central bank attem to manipulate the expectation of inflation in order to arrive
·
at the desired here
↳ focus on
aggregated variables
Economy =
System of trace
↳ grovides as indication on the cerdition of the
economy of goods and services. O in a
society
as a whole
variables Macro-economy
revenues
:
income of (Measure of
·
National >
- sum production economic ablity
·
Economic growth & growth in national incere [increase in r .
GDP]
level
Inflation
· >
- change in
aggregale price
·
unemployment & incidence of worked losing jobs & policymakers are concerned about
·
InternationalTrade - (x-N) - not execb
* As firs fire national income increases
grow over .
Firm revenue & = Nominal GDP &
Economic
growth -
change in r .
GDP/in national incere
when economy
is
growing of grath is
positive and
cremployers is falling
↳ Developing economies fend to
grow
at a
faster rate
.
at slower rate
older
a
* This is due to economic volatility economics grow
↳ Price is orglable
can care social unrest
>
-
Unemployment iscydicubecausegruthi cica empym dredele
a
* unemployment rides when
growth falls
y key fader
in policy making
price stability
is to
Economic
policy used acheive .
business + confidence growth
· Inflation causes lover export competitiveness , decreases consumer
,
lover
more unemployment
national incove GDP (gross domestic product)
Measuring
:
method I Sum of all production
· output
·
Income method I Sum of all incove
methed
a of all
· Experditie sun
expenditure
, Method Adds
Output :
of all
the prices and quantities
GVA value added
To fix the problem of double caling - Sum of final goods or (gross
valued
· governions activity is as cast
↳ sum of sales -
Sum of intermediate
· ownershing of houses include inpuled rent
grod
GDP
·
taxes such as rAF are only included In an market prices
occurs when
double conting
of
Incure methed : Income of all factors of production there are
multiple steps
· Wages and Sultrie (labour prediction
·
Prehb Centrepreneurship
:
·
Rent Clud)
Interest
· (Gayikall Impulika rent value placed on an
Transfer asset obred
· paynen's are excluded
6
Expenditure method : GDP = c + 1 * G + (x N) -
y= 0
F -
basically All
model of expenditure
GNP = Gross national preduct : GNP = GDP + ret incre
from abroad
Net national product ONNP) : Nip = GNP-depreciation
circular flow of income another
to one
- All equal
at the
Produchun I because they flow
same
.
rale
firms X
= each alter
incere
C & ext erditure *
to
Income flow
experditie flow
is equal
Households
save flow of
money
in the economy
is nomiral value
Money a
·
Nominal GDP measures value of final goods using current prices
·
Real GDP Measures these values using the prices of a base year
& multiply & by base year griva
area it sure
quarties of output I
We
changes in Nominal GDP can be due to changes in price or .
which caused
real GDP be due to changes in quantity
.
changes In can only
↳ eliminates affect of inflation
, Actual
growth vs potential growth :
Actual growth - increase in actual observed
·
output
Potential
·
output - increase in economy's capacity
Actual growth flackcales around putential outout (ty)
due
fluctuations to changes + Shocks
S
↳ economic in AD
represented on business cycle.
r . GDP
capacity
Economic
Cauy)
normal output
u short-run fluckalich
=
of the eccrory
7 time
O
z
Long-term economic
growth :
Production function : Y = FCK , (51bru
capital
Long-term growth =
> increase in to
seconomic capacity
diminishes
·
As labour keeps increasing -> eventually produclinty
↳ due to overcrowding= law of diminishing returns.
Productinly =
output per
worker
Factor labour
productivity : Marginal prod of
MPL = ecluye of production function Y = FC
MPL & = ) long-term economic
growth (yea)
Demand-side policies : (Short-run Supply-side policy Clury-run) :
feeding fiscul evlicy policies
in
·
increase goul ·
labour market
· lowering taxes ·
increasing technology
·
murchery policy ·
encouraging
investment
, Sustainable
growth :
·
critical planetary brundaries Woled (biodimsly) by needs of socibly
↳ depletion of commun pool resources
An ennronmental ceiling exist to identify violation .
·
berclib of economic
grah
: sesb of economic growth ,
increased consumption general extra was
· ·
may
reduction of aler macro
problems distribution of incere
· o
regulite
· scape for redistribution o environmental casy
batter living strderds &
·
mere income =
schepletion resucrees
Reasonable growth- same as inflation (2 5%)
.
to high great -f unostainable
high inflation
Inflation can come back
inflation
↳ stagflation = low
growth thigh
3 Chigh VE)
Inflution is
explosive - in can
grow rapidly
driven
·
Prices are by expectation
Central bank attem to manipulate the expectation of inflation in order to arrive
·
at the desired here
