Ch. 10 The data of macroeconomics

the study of how households and firms make decisions and how they interact in markets

the study of economy-wide phenomena, including inflation, unemployment, and economic growth

for an economy as a whole, income must equal _____

the market value of all final goods and services produced within a country in a given period of time

spending by households on goods and services with the exception of purchases of new housing- examples: durable and nondurable goods, personal goods, food, fridge,

spending on capital equipment, inventories, and structures, including household purchase of new housing- examples – domestic investment by US firms, purchase of final goods of machinery, construction cost for commercial or residential needs, change in total inventories,

spending on goods and services by local, state, and federal governments- examples- defense and infrastructure

spending on domestically produced goods by foreigners (exports) minus spending on foreign goods by domestic residents (imports)

the production of goods and services valued at current prices

the production of goods and services valued at constant prices (Base year)

a measure of the price level calculated as the ratio of (nominal GDP/ real GDP) X 100

plant equipment

how much something is worth on the market

when selling equipment, how much would seller earn?

ex: a car, b/c it is fully made with all of the parts (intermediate) placed together

services difficult to value like calling the police

volunteer services, parenting

a. government transfer payments- Social security
b. transfers of wealth- money from grandparents to kids
c. transactions in securities markets – bonds
d. 2nd hand or used goods- thrift shop

value of all final goods and services produced by permanent residents during a particular period of time – citizens, ex pats

a problem with GNP – it doesn’t take into account that plant equipment wares out and depreciates in value

NNP= GNP-depreciation

1. GDP has to be considered as a per capita figure
2. leisure
3. quality changes

C I G Nx

GDP = C+I+G+Nx

1. more goods and services produced
2. price increase or inflation

real GDP isn’t influenced by price changes, but nominal is

valuation at cost, non-market transactions, non-productive transactions