Definition of Macroeconomic Variables

• Macroeconomics


  The study of economic behavior and policies that influence consumption and investment, trade balance, and other determinants of various macroeconomic variables
• Macroeconomic factors


  • Economic output
  • Unemployment rates
  • Inflation
• Macroeconomic indicators of economic performance are closely monitored by governments, businesses, and consumers alike
• Macroeconomic problems include inflation and unemployment and their effects on output and redistribution
• Gross Domestic Product (GDP)


  The total value of currently produced final goods and services that are produced within a country's boundary during a given period of time, usually one year
• GDP


  • Measures current production only
  • Includes final goods and services only (not intermediate products)
  • Measures the value of final goods and services produced within the boundaries/territory of a country, irrespective of who produces them
• Gross National Product (GNP)


  The total value of goods and services produced by domestically owned factors of production in a given time period (usually one year), regardless of their geographical location
• NFI (Net Factor Income from Foreign Sources)

  Factor income received from abroad by a country's citizens - factor income paid for foreigners abroad
• When NFI > 0


  GNP > GDP
• When NFI < 0


  GNP < GDP
• When NFI = 0


  GNP = GDP
• If the economy is closed or a country has no interaction with the rest of the world, then GNP = GDP
• Nominal GDP


  The monetary value of currently produced goods and services measured at current prices
• Real GDP


  A measure of real output that excludes the effect of price changes from the GDP calculation. It is the value of currently produced goods and services measured at a constant price.
• Economic growth during 2017-2019 can be measured as (36 - 28) / 28 = 28.6%