Economics
National Economy
The national economy refers to the economic activities and financial interactions within a specific country. It encompasses the production, consumption, and distribution of goods and services, as well as the overall economic health and performance of the country. Factors such as employment rates, inflation, and government policies all play a role in shaping the national economy.
Written by Perlego with AI-assistance
Related key terms
1 of 5
9 Key excerpts on "National Economy"
eBook - PDF- Kevin D. Hoover(Author)
- 2011(Publication Date)
- Cambridge University Press(Publisher)
The U.S. economy in 2008 was 3.3 times larger than the Japanese economy (i.e., U.S. GDP was $14,260 bil-lion and Japanese GDP was $4,329 billion). Most people understand that GDP and its growth rate report the economic score, yet few actually under-stand what they really mean. They are, in fact, the central quantities in macroeconomics. Almost every other quantity that might interest us is either 29 30 The National Accounts and the Structure of the Economy a component of GDP (such as consumption, investment, wages, or profits) or connected to it through important economic relationships (such as unem-ployment or inflation). We begin our study of macroeconomics with the national income and product accounts, the framework through which economists describe the economy as a whole. GDP is the central concept in the modern system of national accounts. According to the U.S. government’s Bureau of Economic Analysis (BEA): G ROSS DOMESTIC PRODUCT (GDP) is “the market value of the final goods and ser-vices produced by labor and property located” within the borders of a country within a definite period . 1 Almost every element of the bare definition of GDP hides some subtle conceptual issue. In Chapter 3, we shall take the definition apart and bring the most important subtleties to light. In this chapter we focus on putting the national accounts to work. We have already seen that GDP provides a quick measure that allows us to compare the economic performance of different countries. In the remainder of this chapter, we shall learn how the national accounts can be used to structure our thinking about the economy. The national accounts are not in themselves economic analysis, but they provide us with the raw material from which to construct a richer under-standing of how the economy works. To understand how we might use the national accounts, we need to understand the process through which GDP is created and distributed.
eBook - PDF- Steven A. Greenlaw, Timothy Taylor, David Shapiro(Authors)
- 2017(Publication Date)
- Openstax(Publisher)
Between the two perspectives, you will obtain a good understanding of what drives the macroeconomy. Policy Tools National governments have two tools for influencing the macroeconomy. The first is monetary policy, which involves managing the money supply and interest rates. The second is fiscal policy, which involves changes in government spending/purchases and taxes. We will explain each of the items in Figure 19.2 in detail in one or more other chapters. As you learn these things, you will discover that the goals and the policy tools are in the news almost every day. 19.1 | Measuring the Size of the Economy: Gross Domestic Product By the end of this section, you will be able to: • Identify the components of GDP on the demand side and on the supply side • Evaluate how economists measure gross domestic product (GDP) • Contrast and calculate GDP, net exports, and net national product Macroeconomics is an empirical subject, so the first step toward understanding it is to measure the economy. How large is the U.S. economy? Economists typically measure the size of a nation’s overall economy by its gross domestic product (GDP), which is the value of all final goods and services produced within a country in a given year. Measuring GDP involves counting the production of millions of different goods and services—smart phones, cars, music downloads, computers, steel, bananas, college educations, and all other new goods and services that a country produced in the current year—and summing them into a total dollar value. This task is straightforward: take the quantity of everything produced, multiply it by the price at which each product sold, and add up the total. In 2016, the U.S. GDP totaled $18.6 trillion, the largest GDP in the world. Each of the market transactions that enter into GDP must involve both a buyer and a seller.
eBook - PDF- James D Gwartney, Richard Stroup, J. R. Clark(Authors)
- 2014(Publication Date)
- Academic Press(Publisher)
Macroeconomics deals with the overall picture—what determines the level of aggregate income, output, and employment in the economy as a whole. Although macroeconomics focuses on aggregated markets, changes that affect the decisions of microunits (individual firms, consumers, and workers, for example) are still important. Many contemporary economists believe that in the past some macroeconomic theories failed to recognize the significance of changes in the behavior of microunits. Therefore, even though we will be focusing on highly aggregated markets, we will continue to pay heed to such microeconomic factors as changes in individual prices and the incentives confronting persons who make decisions at the microlevel. In the following pages we will learn to measure the pulse of the entire economy. While this is clearly a macroeconomic view, we must remember that the overall pulse is made up of millions of indi-vidual pulses lumped together. THE CONCEPT OF GNP The gross national product is a measure of the market value of all final goods and services produced during a specific time period. GNP is a flow concept and is typically measured in terms of an annual rate. It is designed to measure the market value of production that flows through the economy's factories and shops each year. Thus, GNP is similar to a water gauge that measures the amount of water that flows through a pipe each hour. What Counts The gross national product includes only currently produced final goods mea-toward GNP? sured in dollars. Since measurement is restricted to current production, many trans-actions that take place in the country have to be excluded. 1. Only Final Goods Count. A. final good is a good in the hands of its ultimate user. Goods go through many stages of production. But GNP counts only the dollar market value of all final goods and services produced during a year. Exhibit 1 will help to clarify this important point.
eBook - PDFPublic Sector Economics
Made Simple
- D. I. Trotman-Dickenson(Author)
- 2014(Publication Date)
- Made Simple(Publisher)
Multiple Causes Trade cycles cannot be attributed to a single cause. Most present day econ-omists accept a combination of internal and external theories as an expla-nation of the trade cycle but differ in emphasis and on policies to counter-act the fluctuations. Keynesian economists favour fiscal policy to manage the economy. Professor Milton Friedman's study in the Monetary History of the United States 1867-J960 showed a relationship between the supply of money, price level and economic activity. This relationship still appears to exist and not only in the USA, with the result that in recent years governments of major countries have been shifting emphasis from fiscal to monetary policy in an attempt to stabilise their economies and to secure economic growth. National Income 33 Summary 1 The national income of a country is the aggregate of the income of its citi-zens. This total equals total expenditure and each in turn equals total output— after adjustments for foreign transactions and government transfer payments and taxation. 2 There are three ways of calculating national income: the income method, the expenditure method, and output method. 3 National income can be expressed at (a) current market prices, (b) constant prices (in real terms), that is those prevailing in the base year with which subsequent years are compared, to avoid distortions due to changes in the value of money (e.g. inflation). Per capita national income is the total national income divided by the number of people in a country. This gives national income per head of the popula-tion. 4 Governments use national income data for the purpose of managing of national economies and as a measuring rod for international commitments. 5 International comparison of economic welfare (the standard of living) on the basis of national income is difficult and can lead to misleading conclusions without a thorough knowledge of the economies that are being compared.
eBook - PDF- L Engelbrecht, A Strydom, L Engelbrecht, A Strydom(Authors)
- 2014(Publication Date)
- Future Managers(Publisher)
Module 1 2 FutureManagers 1. Macro-economic issues Objectives The macro economy is the environment which includes all economic participants and their interactions with each other – nationally and globally. In a mixed economy, the government is ultimately responsible for overall the performance of the National Economy. Although private businesses and individuals will act in their own interests, namely to make a profit, it is the domain of the state to ensure that the economy performs well in all areas. In doing so, they set certain macro- economic objectives. These are: • Output The output of the economy refers to how much is produced during a given period for example one year. This refers to the Gross Domestic Product of the country (GDP). GDP measures the total value of goods and services produced within the borders of the country. It is desirable for total production output to increase every year in order to meet the financial needs of the country and its growing population. This necessitates that output increases in all three economic sectors, namely the Primary, Secondary and Tertiary sectors. Year on year calculations are made to determine the progress of the economy. Increases in GDP from one year to the next are calculated and expressed as a percentage. This is how economic growth is derived. Economic growth is probably the most important economic objective of all as it is the force that drives all of the other objectives. • Employment In an ideal world, all of the factors of production would be fully employed. This would mean that no capital or labour (or other factor) would be idle. It is particularly important that labour is employed. Unemployed people are unable to derive an income which can lead to poverty, hunger and other social problems such as crime. It is increasingly difficult for people in modern, developed economies to find employment without the necessary skills.
eBook - PDF- Steven A. Greenlaw, David Shapiro, Daniel MacDonald(Authors)
- 2022(Publication Date)
- Openstax(Publisher)
In macroeconomics, we use the theories of aggregate demand (AD) and aggregate supply (AS). This book presents two perspectives on macroeconomics: the Neoclassical perspective and the Keynesian perspective, each of which has its own version of AD and AS. Between the two perspectives, you will obtain a good understanding of what drives the macroeconomy. Policy Tools National governments have two tools for influencing the macroeconomy. The first is monetary policy, which involves managing the money supply and interest rates. The second is fiscal policy, which involves changes in government spending/purchases and taxes. We will explain each of the items in Figure 19.2 in detail in one or more other chapters. As you learn these things, you will discover that the goals and the policy tools are in the news almost every day. 19.1 Measuring the Size of the Economy: Gross Domestic Product LEARNING OBJECTIVES By the end of this section, you will be able to: • Identify the components of GDP on the demand side and on the supply side • Evaluate how economists measure gross domestic product (GDP) • Contrast and calculate GDP, net exports, and net national product Macroeconomics is an empirical subject, so the first step toward understanding it is to measure the economy. How large is the U.S. economy? Economists typically measure the size of a nation’s overall economy by its gross domestic product (GDP), which is the value of all final goods and services produced within a country in a given year. Measuring GDP involves counting the production of millions of different goods and services—smart phones, cars, music downloads, computers, steel, bananas, college educations, and all other new goods and services that a country produced in the current year—and summing them into a total dollar value. This task is straightforward: take the quantity of everything produced, multiply it by the price at which each product sold, and add up the total.
eBook - PDF- David Shapiro, Daniel MacDonald, Steven A. Greenlaw(Authors)
- 2022(Publication Date)
- Openstax(Publisher)
In macroeconomics, we use the theories of aggregate demand (AD) and aggregate supply (AS). This book presents two perspectives on macroeconomics: the Neoclassical perspective and the Keynesian perspective, each of which has its own version of AD and AS. Between the two perspectives, you will obtain a good understanding of what drives the macroeconomy. Policy Tools National governments have two tools for influencing the macroeconomy. The first is monetary policy, which involves managing the money supply and interest rates. The second is fiscal policy, which involves changes in government spending/purchases and taxes. We will explain each of the items in Figure 6.2 in detail in one or more other chapters. As you learn these things, you will discover that the goals and the policy tools are in the news almost every day. 6.1 Measuring the Size of the Economy: Gross Domestic Product LEARNING OBJECTIVES By the end of this section, you will be able to: • Identify the components of GDP on the demand side and on the supply side • Evaluate how economists measure gross domestic product (GDP) • Contrast and calculate GDP, net exports, and net national product Macroeconomics is an empirical subject, so the first step toward understanding it is to measure the economy. How large is the U.S. economy? Economists typically measure the size of a nation’s overall economy by its gross domestic product (GDP), which is the value of all final goods and services produced within a country in a given year. Measuring GDP involves counting the production of millions of different goods and services—smart phones, cars, music downloads, computers, steel, bananas, college educations, and all other new goods and services that a country produced in the current year—and summing them into a total dollar value. This task is straightforward: take the quantity of everything produced, multiply it by the price at which each product sold, and add up the total.
eBook - PDFEconomics
Principles & Policy
- William Baumol, Alan Blinder, John Solow, , William Baumol, Alan Blinder, John Solow(Authors)
- 2019(Publication Date)
- Cengage Learning EMEA(Publisher)
The share of GDP that passes through markets in the United States is enormous. Although government purchases of goods and services amount to about 20 percent of GDP, much of that is purchased from private businesses. Direct government production of goods is extremely rare in the U.S. 2-1b A Relatively “Closed” Economy All nations trade with one another, and the United States is no exception. As of 2017, our annual exports were over $2.3 trillion and our annual imports were around $2.9 trillion. That’s a lot of money, and so is the gap between them. But America’s international trade often gets more attention than it deserves. The fact is that we still produce most of what we consume and consume most of what we produce, although the shares of imports and exports have been growing, as Figure 1 shows. In 1959, the average of exports and imports was only 3.5 percent of GDP, a tiny fraction of the total. It has since gone up to an all-time high of over 14.5 percent in 2017. Although this is no longer negligible, it still means that over 85 percent of what Americans buy every year is made in the United States. Among the most severe misconceptions about the U.S. economy is the myth that this country no longer manufactures anything, but imports everything from, say, China. In fact, as of 2017, only 15 percent of U.S. GDP was imported, with imports from China making up less than one-sixth of those imports. Gross domestic product (GDP) is the sum of the money values of all final goods and services produced in the domestic economy and sold on organized markets during a specified period of time, usually a year. 22 Part 1 Getting Acquainted with Economics Copyright 2020 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. Due to electronic rights, some third party content may be suppressed from the eBook and/or eChapter(s).
eBook - PDF- Graham Mallard(Author)
- 2017(Publication Date)
- Red Globe Press(Publisher)
In fact, unemployment perhaps damages more lives, and more seriously, in developed countries than any of the issues examined in the previous four chapters. However, they require a different approach if they are to be understood – one that considers the economy as a whole rather than the behaviour and interaction of economic actors – and different types of poli-cies are needed to address them. This is what macroeconomics is all about and why it’s just as important and exciting as microeconomics. 3 3 153 the size of the economy 9 the size of the economy As we've already seen, the purpose of studying macroeconomics is for us to understand how the economy as a whole functions and how the government can intervene to make it function better. The first step towards this goal is for us to examine what we actually mean by ‘the economy’ and what factors determine its size. This is the focus of this chapter. 9.1 a two-economy circular flow Let’s start by examining the model known as the circular flow of income and expenditure , a model of how money circulates around the economy. This will help us see what the economy is and what factors are active within in. Wil-liam Phillips – of Phillips curve fame (see Section 11.4) – developed a physi-cal example of this model, in which money is represented by water that flows through a series of tubes and reservoirs representing the workings of the economy. Here we make do with a diagram. Figure 9.1 is a relatively sophisticated version of the circular flow, including two separate economies interacting with one another in the global marketplace. Consider first the left-hand panel of the diagram, which represents economy A. The model simplifies reality to include only three key microeconomic actors (households, producers and the government) and three key markets (product markets, financial markets and factor markets).
Index pages curate the most relevant extracts from our library of academic textbooks. They’ve been created using an in-house natural language model (NLM), each adding context and meaning to key research topics.
