macro

• Introduction to Macroeconomic Variables– PART 1
• Sections


  • 01 – The National Accounts
  • 02 – Inflation
  • 03 – Hyperinflation and Deflation
  • 00 - Introduction to Macroeconomics
  • 04 – Unemployment
• Economics


  • -
  • -
  • ▪
  • ▪
  • ▪
  • ▪
  • ▪
• Main fields in Economics

  • -
  • conditions
  • -
• Goal of this Course


  • ▪
  • ▪
  • ▪
• Object of study of Macroeconomics

  • -
  • -
• Macroeconomic Variables


  • ▪
  • ▪
  • ▪
  • ▪
  • ▪
  • ▪
  • ▪
  • ▪
• Macroeconomics also deals with the study of government Economic Policies


  • -
  • -
  • -
  • -
• Schools of Macroeconomic Thought

  • -
  • ▪
  • -
  • ▪
• Schools of Macroeconomic Thought

  • -
  • -
• Macroeconomics as a Science

  • -
  • ▪
  • ▪
  • ▪
  • ▪
• GNP (Gross National Product)


  Market value of the production of final goods and services carried out, in one year, by domestically owned productive factors
• Real GNP


  Value of the production of final goods and services carried out in one year, by domestically owned productive factors, using the prices of a base year
• In the base year: Nominal GNP = Real GNP
• GDP (Gross Domestic Product)


  Market value of the production of final goods and services carried out in an economy, in one year, by the productive factors located in the country
• GDP


  GNP + Income of Foreign factors located in the country - Income of National factors located abroad
• Economic Growth


  Rate of increase in real GDP (Increased production of goods and services)
• Economic Cycles


  • Expansions: positive growth periods
  • Recessions: negative growth periods
• National Income (NI)


  Gross remuneration of all the productive factors of the economy over the course of a year
• Circular Flow


  1. Factor Markets (e.g. labor market)

  2. Markets for Goods & Services

  3. Goods and Services

  4. Goods and Services

  5. Money Flow: Expenses

  6. Money Flow: Revenues

  7. Money Flow: Costs

  8. Money Flow: Income

  9. Factors of Production

  10. Factors of Production

  11. Taxes

  12. Taxes

  13. Subsidies

  14. Transfers
• National Income (NI)


  GNP - Depreciation of capital (K) - Indirect Taxes + Subsidies
• Origin of Income


  • From Labor: salary, wages, payments in kind...
  • From Capital: profits, dividends, interest...
  • From Land: rental income, capital gains...
• Disposable Income


  NI - Direct Taxes + Public Sector Transfers to Families
• Private saving


  The portion of disposable income that is not consumed
• Aggregate Expenditure


  GDP = C + I + G + NX
• Aggregate Supply and Demand

  GDP = C + I + G + NX
• In the short term

  GDP depends on the evolution of the components of demand
• In the long term

  GDP depends on the evolution of supply conditions (technological innovations, productivity of labor and capital ...)
• Value Added


  Value of Sales - Cost of Embedded Intermediate Goods
• GDP = Sum of the added value of all sectors of the economy
• Total production of final goods and services is equivalent to the sum of value added, the sum of earned incomes and total expenditures
• Gross Domestic Product: The 3 methods

  1. Production

  2. Income

  3. Expenditure (Demand)
• Real GDP controls for inflation
• Nominal GDP does not control for inflation
• Real GDP is calculated using a base year
• Nominal GDP is calculated using current year prices
• Real GDP is a better measure of economic growth than nominal GDP
• GDP per capita


  GDP divided by the total population
• Growth Projections (IMF)
• Inflation


  The aggregate increase in the level of prices in the economy