Econ 302 9 11 2009 Week 2 1 Chapter 2 Macroeconomic Data Three Central Measures Gross Domestic Product GDP GDP is the total market value of all final goods and services produced within a country in a given period of time usually quarterly or yearly How to Calculate GDP Definition goods piqi ith good Product Approach Market Value of Final Goods Services Expenditure Approach Expenditure on Final Goods Services Income Approach Factor Payments by Firms Factor Income Value Added Approach Value Added by Firms Included final goods change in inventories imputed rent on owned real estate Excluded used goods sales out of inventories intermediate goods underground econ NGDP weight current year quantities by current year prices RGDP weight current year quantities by base year prices GDP Deflator Nominal GDP Real GDP Y C I G NX C I G X M national income accounting identity Inflation Rate CPI Current Market Basket Expenditure Base Year Market Basket Expenditure CPI or GDP Deflator Sources of bias substitution introduction of new goods unobserved changes in quality Unemployment Rate UR LF E U UR U 100 LF LFPR LF 100 Adult Population Not in LF student household producer retiree discouraged worker prisoner self employed Circular Flow Diagram Economic agents firms and households Two markets goods market factor market Econ 302 9 11 2009 Week 2 2 National Income Accounting GNP GDP NFP NNP GNP Depreciation NI Employee Compensation Proprietors Income Rental Income Corporate Profits Net Interest Indirect Business Taxes PI NI IBT Corp Profits Social Insurance Contributions Net Interest Dividends TR Personal Interest Income DPI PI Personal Tax Nontax Payments Questions 1 Does the base year matter when computing RGDP Can you pick the wrong base year 2 Where did the GDP Deflator get its name 3 Define the terms Laspeyres index and Paasche index Provide examples 4 Is it possible that CPI and GDP Deflator disagree Why or why not 5 How does the US Bureau of Labor Statistics define unemployed Is this a good definition 6 What were the main trends in US LFPR over the past fifty years What factors caused this change 7 Using the income approach what is the largest share of US GDP 8 Japan has an unemployment rate of 10 with 90 million employed people When the unemployment rate was calculated the economy had 5 million discouraged workers A new jobs program instituted by the government drives all of the discouraged workers into the labor force and 80 of them find jobs What happens to the unemployment rate In your opinion was the jobs program successful 9 Complete the following table Trillons of USD Y C Durable goods Nondurable goods Services I Fixed investment Nonresidential Residential Change in private inventories G Federal State and local NX Exports Imports 2007 Q1 1 1 2 8 5 8 2 1 1 4 0 7 0 002 0 95 1 7 1 6 2 6 10 Which of the following are counted in I stock trade issue of stock purchase of a pre existing asset
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