Mankiw - Chapter_23_part 1

Mankiw - Chapter_23_part 1 - Chapter 23 Measuring A Nations...

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1 Chapter 23 Measuring A Nation’s Income 23.1 Introduction z Macroeconomics vs. Microeconomics: ± Microeconomics – the study of market economy: how individual households and firms make decisions and how they interact with one another in markets ± Macroeconomics – the study of economy as a whole with topics such as the economic changes that affect may households, firms, and markets at once.; differences of nations’ incomes, prices (price level), inflation, production and employment, government policies to promote economic growth. ± The relationship between microeconomics and macroeconomics? ² An economy as a whole means a collection of may households and firms interacting in many markets; micro- and macroeconomics are closely linked (Why?. ..) z Main topics in this chapter: Gross Domestic Product (GDP), nominal GDP, real GDP, and GDP deflator 23.2 The economy’s income and expenditure z Why are we interested in a nation’s income and expenditure? ± People with higher income in an economy afford higher standards of living (better housing, better health care, better jobs, and so on) z GDP measures two things at once: the total income of everyone in the economy and the total expenditure on the economy’s output ± For an economy as a whole, income must equal expenditure (Why?) z Every transaction in the economy has two parties : a buyer and a seller .
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Mankiw - Chapter_23_part 1 - Chapter 23 Measuring A Nations...

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