02-Data Of Macro - IN THIS CHAPTER YOU WILL LEARN the meaning and measurement of the most important macroeconomic statistics gross domestic product(GDP

# 02-Data Of Macro - IN THIS CHAPTER YOU WILL LEARN the...

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IN THIS CHAPTER, YOU WILL LEARN: . . . the meaning and measurement of the most important macroeconomic statistics: § gross domestic product (GDP) § the consumer price index (CPI) § the unemployment rate 1
2 CHAPTER 2 The Data of Macroeconomics Gross Domestic Product: Expenditure and Income Two definitions: § Total expenditure on domestically produced final goods and services. § Total income earned by domestically located factors of production. Expenditure equals income because every dollar a buyer spends becomes income to the seller.
3 CHAPTER 2 The Data of Macroeconomics The Circular Flow Households Firms Goods Labor Expenditure (\$) Income (\$)
4 CHAPTER 2 The Data of Macroeconomics
NOW YOU TRY Identifying value added § A farmer grows a bushel of wheat and sells it to a miller for \$1.00. § The miller turns the wheat into flour and sells it to a baker for \$3.00. § The baker uses the flour to make a loaf of bread and sells it to an engineer for \$6.00. § The engineer eats the bread. Compute value added at each stage of production and GDP. 5
6 CHAPTER 2 The Data of Macroeconomics
7 CHAPTER 2 The Data of Macroeconomics C I G G + NX
8 CHAPTER 2 The Data of Macroeconomics
9 CHAPTER 2 The Data of Macroeconomics U.S. Consumption, 2014 45.4 15.3 7.5 68.2 7,990 2,691 1,320 12,002 Services Nondurables Durables Consumption % of GDP \$ billions
10 CHAPTER 2 The Data of Macroeconomics Investment (I) § Spending on capital, a physical asset used in future production § Includes: § Business fixed investment Spending on plant and equipment § Residential fixed investment Spending by consumers and landlords on housing units § Inventory investment The change in the value of all firms’ inventories
11 CHAPTER 2 The Data of Macroeconomics U.S. Investment, 2014 0.5 3.2 12.8 16.5 94 566 2,244 2,905 Inventory Residential Business fixed Investment % of GDP \$ billions
12 CHAPTER 2 The Data of Macroeconomics Investment vs. capital Note: Investment is spending on new capital. Example (assumes no depreciation) : § 1/1/2016: Economy has \$10 trillion worth of capital § During 2016: Investment = \$2 trillion § 1/1/2017: Economy will have \$12 trillion worth of capital
13 CHAPTER 2 The Data of Macroeconomics Stocks vs. Flows A flow is a quantity measured per unit of time. E.g. , “U.S. investment was \$2 trillion during 2016.”