class1 - Key Macroeconomic Variables Key Macroeconomic...

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Unformatted text preview: Key Macroeconomic Variables Key Macroeconomic Variables Xavier Ragot Macroeconomics September 2010 Class 1 Introduction The state of an economy can be understood with 7 economic variables. 1 The Gross Domestic Product (GDP) Class 1 Introduction The state of an economy can be understood with 7 economic variables. 1 The Gross Domestic Product (GDP) 2 The in&ation rate Class 1 Introduction The state of an economy can be understood with 7 economic variables. 1 The Gross Domestic Product (GDP) 2 The in&ation rate 3 The unemployment rate Class 1 Introduction The state of an economy can be understood with 7 economic variables. 1 The Gross Domestic Product (GDP) 2 The in&ation rate 3 The unemployment rate 4 The interest rates (short and long) Class 1 Introduction The state of an economy can be understood with 7 economic variables. 1 The Gross Domestic Product (GDP) 2 The in&ation rate 3 The unemployment rate 4 The interest rates (short and long) 5 The level of the stock market Class 1 Introduction The state of an economy can be understood with 7 economic variables. 1 The Gross Domestic Product (GDP) 2 The in&ation rate 3 The unemployment rate 4 The interest rates (short and long) 5 The level of the stock market 6 The exchange rate Class 1 Introduction The state of an economy can be understood with 7 economic variables. 1 The Gross Domestic Product (GDP) 2 The in&ation rate 3 The unemployment rate 4 The interest rates (short and long) 5 The level of the stock market 6 The exchange rate 7 The current account Class 1 The Gross Domestic Product Rough synonyms include "national income", "aggregate demand", "total production" (Seen with Philippe Ashkenazy). Three ways to construct it. 1 Direct De&nition Class 1 The Gross Domestic Product Rough synonyms include "national income", "aggregate demand", "total production" (Seen with Philippe Ashkenazy). Three ways to construct it. 1 Direct De&nition 2 Expenditure Approach Class 1 The Gross Domestic Product Rough synonyms include "national income", "aggregate demand", "total production" (Seen with Philippe Ashkenazy). Three ways to construct it. 1 Direct De&nition 2 Expenditure Approach 3 Income Approach Class 1 De&nition GDP is the total market value of all &nal goods and services produced within a given period by factors of production located within a country. GDP = &nal sales + change in business inventories How to measure it ? How to di/erentiate between a &nal and an intermediate good ? Class 1 De&nition Value added : The di/erence between the value of goods as they leave a stage of production and the cost of the goods as they entered that stage. De&nition GDP is the sum of the gross value added of all &rms. GDP = ∑ GVA Class 1 GDP is not total production : Example Steel Industry Steel sold to car industry 100 Steel sold to households 20 Wages 90 Pro&ts 30 Car Industry Car sold to households 210 Steel bought 100 wages 70 Pro&ts 40 Total production is 100+20+210=330. What is the GDP ?...
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class1 - Key Macroeconomic Variables Key Macroeconomic...

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