lecture1 - Lecture1 Intermediate Macroeconomics slide 1...

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slide 1 Intermediate Macroeconomics Lecture 1
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slide 2 Intermediate Macroeconomics Important issues in macroeconomics Important issues in macroeconomics Why does the cost of living keep rising? Why are millions of people unemployed,  even when the economy is booming? Why are there recessions?  Can the government do anything to combat  recessions?  Should it??
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slide 3 Intermediate Macroeconomics Important issues in macroeconomics Important issues in macroeconomics What is the government budget deficit?   How does it affect the economy? Why does the U.S. have such a huge trade  deficit?   Why are so many countries poor?   What policies might help them grow out of  poverty?
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slide 4 Intermediate Macroeconomics U.S. Gross Domestic Product U.S. Gross Domestic Product in billions of chained 1996 dollars in billions of chained 1996 dollars 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 1970 1975 1980 1985 1990 1995 2000 l o n g - r u p w a d t e
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slide 5 Intermediate Macroeconomics U.S. Gross Domestic Product U.S. Gross Domestic Product in billions of chained 1996 dollars in billions of chained 1996 dollars 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 1970 1975 1980 1985 1990 1995 2000 Recessions longest economic expansion on record
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slide 6 Intermediate Macroeconomics Learning objectives Learning objectives In this lecture, you will learn about: Gross Domestic Product (GDP) the Consumer Price Index (CPI) the Unemployment Rate
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slide 7 Intermediate Macroeconomics Gross Domestic Product Gross Domestic Product Two definitions: 1. Total expenditure on  domestically-produced  final goods and services 2. Total income earned by  domestically-located  factors of production 
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slide 8 Intermediate Macroeconomics Why expenditure = income Why expenditure = income In every transaction,  In every transaction,  the buyer’s expenditure  the buyer’s expenditure  becomes the seller’s income. becomes the seller’s income. Thus, the sum of all  Thus, the sum of all  expenditure equals  expenditure equals  the sum of all income. the sum of all income. In every transaction,  In every transaction,  the buyer’s expenditure  the buyer’s expenditure  becomes the seller’s income. becomes the seller’s income. Thus, the sum of all  Thus, the sum of all  expenditure equals  expenditure equals  the sum of all income. the sum of all income.
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slide 9 Intermediate Macroeconomics Value added Value added definition:   A firm’s  value added  is  the value of its output  minus  the value of the intermediate goods  the firm used to produce that output.   
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slide 10 Intermediate Macroeconomics Exercise: Exercise: A farmer grows a bushel of wheat  and sells it to a miller for $10.00.   The miller turns the wheat into flour  and sells it to a baker for $15.00.   The baker uses the flour to make a loaf of  bread and sells it to an engineer for $30.00.  
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This note was uploaded on 04/14/2010 for the course ECON 3353 taught by Professor Prodan during the Spring '05 term at University of Alabama - Huntsville.

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lecture1 - Lecture1 Intermediate Macroeconomics slide 1...

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