intermed macro midterm study guide

# Intermed macro - Macro Mid-Term Study Guide Chap 2-Calc GDP using expenditure and income approaches Expenditure Approach Y=C I G(x-m Income

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Macro Mid-Term Study Guide Chap. 2: -Calc GDP using expenditure and income approaches Expenditure Approach: Y=C+I+G+(x-m) Income approach: Y=NI + Depreciation + indirect sales taxes + net factor payments to ROW – subsidies NI= wages + self-employed income + rental income + corporate profits + interest payments + interest payments made by firms -National GDP -Real GDP and Nominal GDP NGDP 02: Σ (P 02)(Q 02) P=Price Q=Quantity RGDP 02: Σ (P base)(Q 02) RGDP 02: NGDP 02 GDP Deflator or Price Index GDP Deflator= NGDP/RGDP Ch. 3: -Production function and graph Y= AF (K, L) Production Function ^ TFP -Labor demand and Labor Supply Cuve (substitution effect-slope up) (income affect-slope down)

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3 factors shift labor demand 1) A change in the firm’s level of output: An increase in output shifts D L right 2) Changes in MPK and MPL: if the profuctivity of the firm’s inputs increases, the firm can produce more. 3) Changes in the firm’s Capital Stock: if the firm’s capital stock increases it can produce more output 5 factors shift labor Supply: 1) Prices- an increase in the Price Level will cause an increase in Labor Supply higher price=lower real wage leads to increase in amount of labor willing to supply 2) Wealth and Non-Labor Income- this represents income that is received from sources
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## This note was uploaded on 04/28/2008 for the course ECON 101 taught by Professor Fon during the Spring '06 term at GWU.

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Intermed macro - Macro Mid-Term Study Guide Chap 2-Calc GDP using expenditure and income approaches Expenditure Approach Y=C I G(x-m Income

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