- 6 pages
- English
- ePUB (mobile friendly)
- Available on iOS & Android
eBook - ePub
About this book
A better understanding of how the economy works in general is crucial for established businesses, start-ups and students of economics. This 3-panel (6-page) guide, jam-packed with up-to-date information, examines macroeconomics in great detail.
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Yes, you can access Macroeconomics by in PDF and/or ePUB format, as well as other popular books in Economics & Business General. We have over one million books available in our catalogue for you to explore.
Information
NOMINAL GDP VS. REAL GDP
- REAL GDP = Nominal GDP deflated by the Price Index
- Assume only 2 goods are produced in an Economy (goods A and B):
YR1 PRICE1 × QTY1 = GDP1 GOOD A $2 × 100 = $200 GOOD B $3 × 90 = $270 NOMINAL GDP1 = $470 YR2 PRICE2 × QTY2 = GDP2 GOOD A $4 × 80 = $320 GOOD B $3 × 70 = $700 NOMINAL GDP2 = $1,020 - Using Nominal GDP, it shows an increase in year 2. To know if productivity really increased in year 2, Real GDP measures have to be used.
- Using YR 1 as the Base Year, NOMINAL GDP1 = REAL GDP1 = $470
- YR1 PRICES WILL BE APPLIED TO YR2 QTY to get real GDP2
Because REAL GDP1 > REAL GDP2, productivity actually decreased.YR2 Real GDP PRICE1 × QTY2 = GDP2 GOOD A $2 × 80 = $160 GOOD B $3 × 70 = $210 REAL GDP2 = $370
- Price Index: Average level of prices in a given year relative to the average level. Cost of a fixed basket of goods reported as a percentage of base period cost.
- GDP Price Index or GDP Deflator: A measure of the average price of all goods and services.
- Consumer Price Index (CPI): A measure of the BUSINESS CYCLES average price of urban consumer goods and services.
- Producer Price Index (PPI): A measure of the average price of goods bought by producers (includes crude materials; intermediate goods).
- Base Year: Standard year used to compute price indices. Base Year Index = 100.
- Cost of Living Adjustment (COLA): Automatic adjustments of income to the rate of inflation. This is also called indexing.
- Inflation: Continuous increase in the average level of prices of goods and services over time.
- Inflation rate: The growth between price indices.
CPI2 - CPI1 × 100 CPI1 - Types of Inflation:
- Supply side inflation (Supply Decrease)
- Wage-push = wage increase leads to price increase
- Cost-push = increase in non-labor costs leads to price increase
- Demand-pull inflation: An increase in the price level initiated by excessive aggregate demand.
- Supply side inflation (Supply Decrease)
- Macro Consequences of (Unanticipated) Inflation:
- Uncertainty
- Speculation
- Non-productive investments
- Deflation: Continuous decrease in the average level of prices of goods and services (negative inflation rate) over time.
- Disinflation: Falling inflation rate. Note that prices are still increasing.
- Hyperinflation: Inflation of 100% or more per year (EX: Germany 1923, Yugoslavia 1993, Ecuador 2000).
- Labor force: Employed + Unemployed
- Employed: Working and not looking for work
- Unemployed: 3 requirements to be categorized as unemployed:
- Not working
- Able to work
- Looking for work
- OUTSIDE THE LABOR FORCE = working age population, or working age but not looking for work.
- EMPLOYMENT rate =
employed total × 100 labor force - UNEMPLOYMENT rate =
unemployed total × 100 labor force - Types of Unemployment:
- Seasonal: Unemployed during periods between agricultural seasons, tourist seasons, school breaks, etc.
- Frictional: Unemployment as people move between jobs or into the labor market.
- Structural: Workers laid off by declining industries or in declining regions, or by job obsolescence.
- Cyclical: Unemployment due to general economic recession.
- Macro consequences ...
Table of contents
- Overview
- Supply & Demand
- Economic Aggregates
- Nominal GDP Vs. Real GDP
- Business Cycles
- Macro Theories
- Aggregate Spending Keynesian Approach
- Keynesian Equilibrium
- Effect Of Taxes On Income
- Leakages/Injections Approach
- Differential Effect Of Increasing T & G
- Endogenous Imports
- Paradox Of Thrift
- GDP GAP & The Multiplier
- Fiscal Policy
- Problems With Fiscal Policy
- Inflation Adjusted Curve
- Phillips Curve Trade-Off
- Aggregate Demand & Supply
- Natural Rate Of Unemployment
- Stagflation
- Role Of Expectations
- Money
- Federal Reserve System (FED)
- Banking
- Money Creation Process
- Burden Of National Debt
- Financial Sector
- Recent Financial Crises