Date post: | 21-Dec-2015 |
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II. Unit IIA. Measuring Domestic Output,
National Income, and the Price Level1. Important facts about the GDP figure2. Three accounting identities
a. The expenditures approachto GDP
b. The income approach to GDPc. The leakages/injections identity
B. Macroeconomic Instability:Unemployment and Inflation1. Types of unemployment2. Economic and noneconomic
costs of unemployment3. Full employment... the goal
defined4. Redistributive and output effects
of inflation
EXPENDITURES(NO GOV. OR INT'L TRADE)
GDP -- C + ACTUAL I
CONSUMPTION
. . . includes expenditures by householdson . . .
GDP -- C + ACTUAL I
CONSUMPTION
. . . includes expenditures by householdson . . .
CONSUMPTION occurs when outputgoes to households.
EXPENDITURES(NO GOV. OR INT'L TRADE)
)
GDP -- C + ACTUAL I
INVESTMENT (GROSS PRIVATEDOMESTIC INVESTMENT) IG
1. All final purchases ofmachinery, equipment, and tools
by business enterprises
2.All construction (nongovernmental)3. Changes in inventories
EXPENDITURES(NO GOV. OR INT'L TRADE)
GDP -- C + ACTUAL I
INVESTMENT occurs when outputis retained by the business community(or sector).
EXPENDITURES(NO GOV. OR INT'L TRADE)
GDP -- C + ACTUAL I
INVESTMENT occurs when outputis retained by the business community(or sector).
Investment is the PHYSICAL creationof capital.
EXPENDITURES(NO GOV. OR INT'L TRADE)
)
GDP -- C + ACTUAL I
CONSUMPTION occurs when outputgoes to households.
INVESTMENT occurs when outputis retained by the business community(or sector).
EXPENDITURES(NO GOV. OR INT'L TRADE)
GDP -- C + ACTUAL I
STUFF PRODUCED BY THE ECONOMYDURING THE YEAR
EXPENDITURES(NO GOV. OR INT'L TRADE)
GDP -- C + ACTUAL I
STUFF PRODUCED BY THE ECONOMYDURING THE YEAR
STUFF WHICH GOES TO HOUSEHOLDSDURING THE YEAR
EXPENDITURES(NO GOV. OR INT'L TRADE)
)
GDP -- C + ACTUAL I
STUFF PRODUCED BY THE ECONOMYDURING THE YEAR
STUFF WHICH GOES TO HOUSEHOLDSDURING THE YEAR
STUFF RETAINED BY BUSINESS SECTORDURING THE YEAR
EXPENDITURES(NO GOV. OR INT'L TRADE)
GDP -- C + ACTUAL I
STUFF PRODUCED BY THE ECONOMYDURING THE YEAR
STUFF WHICH GOES TO HOUSEHOLDSDURING THE YEAR
STUFF RETAINED BY BUSINESS SECTORDURING THE YEAR
THE STUFF MUST GO SOMEWHERE..
EXPENDITURES(NO GOV. OR INT'L TRADE)
GDP -- C + ACTUAL I
STUFF PRODUCED BY THE ECONOMYDURING THE YEAR
STUFF WHICH GOES TO HOUSEHOLDSDURING THE YEAR
STUFF RETAINED BY BUSINESS SECTORDURING THE YEAR
THE STUFF MUST GO SOMEWHERE..
AND
THERE ARE ONLY TWO PLACESFOR IT TO GO!!!
EXPENDITURES(NO GOV. OR INT'L TRADE)
)
GDP -- C + ACTUAL I
INVESTMENT (GROSS PRIVATEDOMESTIC INVESTMENT) IG
1. All final purchases ofmachinery, equipment, and tools
by business enterprises
2.All construction (nongovernmental)3. Changes in inventories
EXPENDITURES(NO GOV. OR INT'L TRADE)
GDP -- C + ACTUAL I
INVESTMENT occurs when outputis retained by the business community(or sector).
EXPENDITURES(NO GOV. OR INT'L TRADE)
GDP -- C + ACTUAL I
INVESTMENT (GROSS PRIVATEDOMESTIC INVESTMENT) IG
1. All final purchases ofmachinery, equipment, and tools
by business enterprises
2.All construction (nongovernmental)3. Changes in inventories
EXPENDITURES(NO GOV. OR INT'L TRADE)
GDP -- C + ACTUAL I
INVESTMENT occurs when outputis retained by the business community(or sector).
EXPENDITURES(NO GOV. OR INT'L TRADE)
GDP -- C + ACTUAL I
INVESTMENT (GROSS PRIVATEDOMESTIC INVESTMENT) IG
1. All final purchases ofmachinery, equipment, and tools
by business enterprises
2.All construction (nongovernmental)3. Changes in inventories
EXPENDITURES(NO GOV. OR INT'L TRADE)
GDP -- C + ACTUAL I
---------------------------
INVESTMENT (GROSS PRIVATEDOMESTIC INVESTMENT) IG
1. All final purchases ofmachinery, equipment, and tools
by business enterprises
2.All construction (nongovernmental)3. Changes in inventories
EXPENDITURES(NO GOV. OR INT'L TRADE)
Suppose producer wishes to increase theinventories he is carrying by 2 boxes
during the year.
Suppose he that he can sell4 boxes during the year.
He will therefore produce 6 boxes.
believes
EXPENDITURES(NO GOV. OR INT'L TRADE)
Suppose producer wishes to increase theinventories he is carrying by 2 boxes
during the year.
He will therefore produce 6 boxes.
Suppose he sells only 2 boxes.actually
Suppose he that he can sell4 boxes during the year.
believes
Suppose producer wishes to increase theinventories he is carrying by 2 boxes
during the year.
He will therefore produce 6 boxes.
ACTUAL I IS 4 BOXES.PLANNED I IS ONLY 2 BOXES.
Suppose he that he can sell4 boxes during the year.
believes
Suppose he sells only 2 boxes.actually
Suppose producer wishes to increase theinventories he is carrying by 2 boxes
during the year.
Suppose he believes that he can sell 4 boxesduring the year.
He will therefore produce 6 boxes.
believes
Suppose he actually sells only 2 boxes.actuallyACTUAL I IS 4 BOXES.
PLANNED I IS ONLY 2 BOXES.
HE "ACCIDENTALLY" BUYS
2 EXTRA
BOXES