Mych02a - Chapter 2 Measurement and Structure of the...

Info iconThis preview shows pages 1–10. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Chapter 2 Measurement and Structure of the Economy National Income Accounting : Three approaches Gross Domestic Product Saving and Wealth Real GDP, Price Indexes, and Inflation Interest Rates 1 2 Macroeconomics is about reality, in numbers. In World War II, Keynes was appointed by Churchill to finance the war effort, without issuing money. His success was based on the numbers estimated by Colin Clark. The tradition of national accounts was then born. 3 Concise conceptual framework and thoughtful definition are the essence of the system. The framework traces its roots to Tableau Economique of Francois Quesnay, Royal physician of Louis XV. The formulation of definitions was the cumulated work of many English economists under Keynes and modified by scholars like Kuznets. Both these two elements are essential like the theory of Copernicus and the telescope of Galileo. National Income Accounting Macroeconomics is about reality, in numbers. Current economic activity is measured in 3 approaches Product approach: the output produced Income approach: the incomes generated Expenditure approach: the amount of spent The same pie of income is cut three ways: each approach yields a distinct type of insight 4 The Circular Flow The Firm The household income spending 5 The House- hold The Firm income spending output Circular flow At 3 cuts Equal Size Different partitions 6 total production = total income = total expenditure (2.1) The Fundamental Identity 7 Gross Domestic Product GDP is the market value of final goods and services newly produced within a nation during a fixed period of time 8 Gross Domestic Product GDP is the market value of final goods and services newly produced within a nation during a fixed period of time Avoiding the issue of how much to depreciate 9 Gross Domestic Product...
View Full Document

This note was uploaded on 03/10/2010 for the course ECON 3140 taught by Professor Mbiekop during the Spring '07 term at Cornell University (Engineering School).

Page1 / 32

Mych02a - Chapter 2 Measurement and Structure of the...

This preview shows document pages 1 - 10. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online