Market & Basic Prices and Factor cost GDP (
• These differ due to taxes and subsidies
CALCULAT
• TWO types of Taxes:
1. Product
1. Taxes on products (levied on each product)
Sum of all
2. Taxes on production (levied on the company)
of the pro
Macro economic objective: • TWO types of Subsidies:
2. Expend
1. Subsidies on products (on each product produced)
prices)
HOW TO MEASURE THESE 2. Subsidies on production (on the company)
5x objectives: Sum of all
- Economic Growth: a rate of growth OBJECTIVES: 3. Income
which allows an increase in living - Economic Growth: use the Sum of all
standards without undue structural and increase in economic activity. each step
environmental difficulties. Expressed in GDP (Also look *all the me
- Full employment: where those who are at production, income and different ro
able and willing to have a job can get expense)
one, given that there will be a certain - Full employment: Use Economic
amount of frictional, seasonal and unemployment rate growth of
structural unemployment (referred to as - Price stability: Use consumer
the natural rate of unemployment). price index (CPI) • GDP gr
- Price stability: when prices remain - External stability: Use (inflatio
largely stable, and there is not rapid balance of payments • GDP gr
inflation or deflation. Price stability is not - Equitable distribution of • Look at
necessarily the same as zero inflation, income: Use Lorenz curve, GDP
but instead steady levels of low- Gini coefficient or quantile
moderate inflation is often regarded as ratio Nominal G
ideal. It is worth noting that prices of value) of a
some goods and services often fall as a MEASURING THE GDP produced i
GDP = Gross Domestic Product country.
result of productivity improvements
= total value of all final goods and The nominal value of a good is its value in terms of money. The
during periods of inflation, as inflation is Real GDP
services, Produced within the real value is its value in terms of some other good, service, or
only a measure of general price levels. economy,
boundaries of the country, in a bundle of goods.
However, inflation is a good measure of adjustmen
particular period (usually 1 year) e.g. R10 in 2000 is still R10 Today (Nominal Value) however the
'price stability'. Zero inflation is often into an ind
• GROSS means do not subtract value of what you can do with the R10 today versus what you
undesirable in an economy. ("Internal
the depreciation on capital could’ve done with it in 2000 is much less (Real Value)
Balance" is used to describe a level of GNI (gro
economic activity that results in full goods. Example: Pot holes in INCOM
Calculations
employment with no inflation) roads, rust on machinery, INCO
- External stability: equilibrium in the broken equipment) Nominal GDP – Real GDP – use the prices in the base of the
Balance of payments without the use of • In order to add different final use the price of year, to exclude the effects of inflation. (Domest
artificial constraints. That is, exports goods together, use the price that particular (measure increase in PRODUCTION) *all South
roughly equal to imports over the long of the goods and services. This year
run. expresses the value of the
• These differ due to taxes and subsidies
CALCULAT
• TWO types of Taxes:
1. Product
1. Taxes on products (levied on each product)
Sum of all
2. Taxes on production (levied on the company)
of the pro
Macro economic objective: • TWO types of Subsidies:
2. Expend
1. Subsidies on products (on each product produced)
prices)
HOW TO MEASURE THESE 2. Subsidies on production (on the company)
5x objectives: Sum of all
- Economic Growth: a rate of growth OBJECTIVES: 3. Income
which allows an increase in living - Economic Growth: use the Sum of all
standards without undue structural and increase in economic activity. each step
environmental difficulties. Expressed in GDP (Also look *all the me
- Full employment: where those who are at production, income and different ro
able and willing to have a job can get expense)
one, given that there will be a certain - Full employment: Use Economic
amount of frictional, seasonal and unemployment rate growth of
structural unemployment (referred to as - Price stability: Use consumer
the natural rate of unemployment). price index (CPI) • GDP gr
- Price stability: when prices remain - External stability: Use (inflatio
largely stable, and there is not rapid balance of payments • GDP gr
inflation or deflation. Price stability is not - Equitable distribution of • Look at
necessarily the same as zero inflation, income: Use Lorenz curve, GDP
but instead steady levels of low- Gini coefficient or quantile
moderate inflation is often regarded as ratio Nominal G
ideal. It is worth noting that prices of value) of a
some goods and services often fall as a MEASURING THE GDP produced i
GDP = Gross Domestic Product country.
result of productivity improvements
= total value of all final goods and The nominal value of a good is its value in terms of money. The
during periods of inflation, as inflation is Real GDP
services, Produced within the real value is its value in terms of some other good, service, or
only a measure of general price levels. economy,
boundaries of the country, in a bundle of goods.
However, inflation is a good measure of adjustmen
particular period (usually 1 year) e.g. R10 in 2000 is still R10 Today (Nominal Value) however the
'price stability'. Zero inflation is often into an ind
• GROSS means do not subtract value of what you can do with the R10 today versus what you
undesirable in an economy. ("Internal
the depreciation on capital could’ve done with it in 2000 is much less (Real Value)
Balance" is used to describe a level of GNI (gro
economic activity that results in full goods. Example: Pot holes in INCOM
Calculations
employment with no inflation) roads, rust on machinery, INCO
- External stability: equilibrium in the broken equipment) Nominal GDP – Real GDP – use the prices in the base of the
Balance of payments without the use of • In order to add different final use the price of year, to exclude the effects of inflation. (Domest
artificial constraints. That is, exports goods together, use the price that particular (measure increase in PRODUCTION) *all South
roughly equal to imports over the long of the goods and services. This year
run. expresses the value of the
