Macroeconomics 102 - Macroeconomics 102: Prelim 1...

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Macroeconomics 102: Prelim 1 Macroeconomics uses aggregation to measure economy-wide variables to study the  sources of inflation and unemployment. Microeconomics focuses on individual behavior  of households and firms and composition in individual markets (such as income  distribution across individuals). National output (Income) GNP (Gross national product):  Income from factors owned by country’s citizens  wherever they are located. GDP (Gross domestic product):  The production within the borders of a country in  a year.  -Not included in GDP: Illegal goods and services, leisure time, intermediate goods, purchase  financial assets, purchase of home built previous years.  -The factors must not be double counted. It is bad. GDP per capita : GDP that has put into consideration of population Nominal GDP:  GDP measure in current dollars, not very desirable “real” GDP:  GDP measured with base year. Measure which tries to eliminate the  effects of inflation Approach for the National Outputs Expenditure approach (Open economy with Government):  Y=C+I+G+ (Ex-Im)    -(Y): Aggregate Output (income) -(C): Consumption expenditure (household spending on consumer goods) *Durable Goods: goods that last relatively long time. (cars and household) *Nondurable goods: food, clothing, gasoline *Services: medical, legal services. -(I): Gross private domestic investment (spending by firms and households on  capital) *Nonresidential investment- expenditure by firms for machine, tools,  plants, and so on.  *residential investment- expenditure on new houses and apartment  buildings. *Depreciation: amount by which an asset’s value falls in a given period
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Macroeconomics 102 - Macroeconomics 102: Prelim 1...

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