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Lecture_3_post - Lecture 3 Principles of Macroeconomics...

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Lecture 3 Principles of Macroeconomics Econ 2 Spring, 2009
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Tracking the Economy First Friday of every month: Employment report
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Tracking the Economy BLS employment situation
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Tracking the Economy QuickTimeª and a  decompressor are needed to see this picture.
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Tracking the Economy QuickTimeª and a  decompressor are needed to see this picture.
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Tracking the Economy QuickTimeª and a  decompressor are needed to see this picture.
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Tracking the Economy monitoring Bernanke and the Fed
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GROSS DOMESTIC PRODUCT: EXPENDITURES APPROACH Y = C + I + G + (X - M) To calculate GDP: Exports Investment Consumption Government Purchases (the total value of foreign goods and services that are bought in the US) Imports
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GDP COMPONENTS: U.S. 0.00 0.15 0.30 0.45 0.60 0.75 1959 1964 1969 1974 1979 1984 1989 1994 1999 2004 Share of total GDP Consumption Government Investment Source: Bureau of Economic Analysis
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IMPORTS AND EXPORTS: U.S. 0 400 800 1,200 1,600 2,000 1959 1964 1969 1974 1979 1984 1989 1994 1999 2004 Billions of dollars (chained $2000) Exports Imports Source: Bureau of Economic Analysis
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The Components of Consumption 1960 2005 Services Services Durables Durables Nondurables Nondurables Source: Bureau of Economic Analysis
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The Components of Investment 1960 2005 Non-residential Structures Software & Equipment Residential Structures Non-residential Structures Software & Equipment Residential Structures Source: Bureau of Economic Analysis
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The Components of Government Purchases 1960 2005 State & Local State & Local Federal Non-defense Federal Defense Federal Defense Federal Non-defense Source: Bureau of Economic Analysis
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Data from our artificial economy
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Corn Producer 2006 Production: 10 million bushels 6 million to hog farmer and 4 million to consumers Sold at $2.00 per bushel Total revenue: $20 million
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Corn Producer Total Revenue $20 million Wages $5 million Interest on loan $0.5 million Taxes $1.5 million
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Hog Producer Total Revenue $30 million Wages $4 million Cost of feed corn $12 million Taxes $3 million 20 million pounds of hogs Sold at $1.50 per pound to consumers
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Artificial Economy After-tax profits = Total Revenue - Wages - Interest - Cost of intermediate inputs - taxes Corn producer $13 million Hog producer $11 million After-tax profits
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Consumers Wage income $14.5 million Interest income $0.5 million Pay Taxes $1 million Profits $24 million
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