ECON 2203 1st Edition Lecture1 KeyEquationsExamplesDefinitionsImportant InformationOutlines - Microeconomics and Macroeconomics - The Measurements of GDP - The Economy’s Output, Income and Expenditure - The component of GDP- Calculate GDP from expenditure side - Real, Nominal GDP - GDP deflator, and Inflation rate - Is GDP a good measure? Microeconomics– Study of how households and firms • Make decisions• Interact in markets and industriesMacroeconomics - Study of economy wide phenomenaExamples of Macroeconomics issues: – What factors lead to economic growth? – What is the influence of trade policy on exchange rates? – What are the effects of inflation on interest rates? The Measurements of GDP If you would like to buy a cow for your ranch, which one do you want? (Assume they are same price).The skinny cow produces 6 gallons of milk a dayThe fat cow produces 2 gallons of milk a day These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.The same logic applies to a nation’s overall economy. Which country is doing better? •The seller bundles a cow with two chickens, which group do you want? (Each group asks for the same price). • 1 gallon of milk = $3.00 and 1 egg = $0.50. Group A:1 Cow: 6 gallons of milk 2 Chickens: 6 eggs Group B:1 Cow: 2 gallons of milk 2 Chickens: 14 eggs You may choose Group A because it creates more valueWhich country is doing better? For US $�.��×�+$�.�×�=$��ForChina $�.��×�+$�.�×��= $13US is doing better because more value1 gallon of milk sells at $3.001 egg sells at
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