Chapter 2 - Chapter 2 The Data of Macroeconomics CHAPTER 2...

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1CHAPTER 2The Data of MacroeconomicsChapter 2 The Data of Macroeconomics
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 Macroeconomicsthe Data of MacroeconomicsEconomists needed some way to combine many individual experiences into a coherent whole. Economic data offer a systematic and objective source of information.Most of the data are collected by government agencies.
4CHAPTER 2The Data of Macroeconomics
5CHAPTER 2The Data of MacroeconomicsThe Circular Flow - BreadHouseholdsFirmsGoodsLaborExpenditure ($)Income ($)
6CHAPTER 2The Data of Macroeconomics
7CHAPTER 2The Data of MacroeconomicsRules for Computing GDPDefinition: market value of all final goods and services produced within an economy in a given period of time. Adding Apples and OrangesGDP = (Price of Apple x Quantity of Apple) + (Price of Oranges x Quantity of Oranges)Used GoodsA stamp collector sells a rare collection to another collectorTreatment of Inventories: one more loaf of breadIf spoiled, doesn’t change GDPIf saved for later, rises GDP.
8CHAPTER 2The Data of MacroeconomicsRules for Computing GDPIntermediate Goods and Value AddedGDP only includes final goods.One way to compute the value of all final goods and services is to sum the value added at each stage of production.Value added: The value of output minus the value of the intermediate goods used to produce that output
9CHAPTER 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 GDP9
10CHAPTER 2The Data of Macroeconomics
11CHAPTER 2The Data of MacroeconomicsRules for Computing GDPHousing Services and Other ImputationsImputed value: estimated valueHousing services (Imputed rent is both included in homeowners’ expenditure and in the homeowners’ income.)Government services: policy officers, firefighters and senators.

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