Defining Macro Variables -- GDP

Defining Macro Variables -- GDP - Econ 1021 Fall 2009...

Info icon This preview shows pages 1–9. Sign up to view the full content.

Defining Macro Variables: Gross Domestic Product Econ 1021 Fall 2009 Outline: 1. Some data… 2. Defining GDP 3. How is GDP calculated? 4. Is GDP a measure of well-being? 5. How are changes in prices taken into account? Reading:    Chapters 5 (sections 1 - 4, 5.1); Chapter 6 from  Macroeconomics in Context
Image of page 1

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

Illustration of the way (real) GDP varies over the business cycle Source: Macroeconomics , 12 th ed., 1999 Richard G. Lipsey, Paul N. Courant & Christopher T.S. Ragan
Image of page 2
The growth rate of U.S. real GDP since 1870 3
Image of page 3

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

The growth rate of real gross domestic product (GDP) in the United States since 1959 4
Image of page 4
A more current look… h t t p : / / w w w . b e a . g o v / b r i e f r m / g d p . h t m March ’01 – Nov ‘01 Expansion of 73 months prior expansion = 120 months Jan ’08 – “present”
Image of page 5

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

Gross Domestic Product Gross Domestic Product: the market value of all newly-produced final goods and services produced by factors of production located in the US, during some specified period of time, usually one year. Some important questions: 1. Given the choice to measure market value, there are some issues to deal with: What are we actually measuring & how do we obtain these measures? How do we avoid “double counting”? How do we deal with the problem of inflation? 1. Is GDP a measure of well-being?
Image of page 6
What are we actually measuring & how do we obtain these measures? The focus in the NIPAs is on manufactured fixed assets & inventories Human, social and environmental capital stocks (and investment in the same) are not well-captured by GDP accounting. Market values are hard to determine: Varied retailers & measurement issues Imputations have to be made when there isn’t a market value for production. No imputation is made for home production Not all market transactions are “observed”
Image of page 7

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

Gross Domestic Product Avoiding “double counting” Circular flow implies that: Value of Value of Value of
Image of page 8
Image of page 9
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern