chap02 - CHAPTER 2 The Data of Macroeconomics IN THIS...

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The Data of MacroeconomicsThe Data of Macroeconomics2CHAPTER
2CHAPTER 2The Data of MacroeconomicsIN 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 rate2
3CHAPTER 2The Data of Macroeconomics
4CHAPTER 2The Data of MacroeconomicsThe Circular FlowHouseholdsFirmsGoodsLaborExpenditure ($)Income ($)
CHAPTER 2The Data of Macroeconomics
6CHAPTER 2The Data of MacroeconomicsNOW YOU TRYIdentifying value addedA 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 $6.00. The engineer eats the bread. Compute value added at each stage of production and GDP.6
7CHAPTER 2The Data of Macroeconomics
8CHAPTER 2The Data of Macroeconomics
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10CHAPTER 2The Data of MacroeconomicsU.S. Consumption, 201445.415.37.568.27,9902,6911,32012,002ServicesNondurablesDurablesConsumption% of GDP$ billions
11CHAPTER 2The Data of MacroeconomicsInvestment (I)Spending on capital, a physical asset used in future production Includes:Business fixed investmentSpending on plant and equipmentResidential fixed investmentSpending by consumers and landlords on housing units Inventory investmentThe change in the value of all firms’ inventories
12CHAPTER 2The Data of MacroeconomicsU.S. Investment, 20140.53.212.816.5945662,2442,905InventoryResidentialBusiness fixedInvestment% of GDP$ billions
13CHAPTER 2The Data of MacroeconomicsInvestment vs. capitalNote: Investment is spending on new capital.Example (assumes no depreciation): 1/1/2016: Economy has $10 trillion worth of capitalDuring 2016:Investment = $2 trillion1/1/2017: Economy will have $12 trillion worth of capital

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