Chap 02_Delong

Chap 02_Delong - CHAPTER2 2-1 Questions calculated...

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CHAPTER 2 Measuring the Macroeconomy 2-1
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Questions What key data do macroeconomists look at? How are key macroeconomic data estimated and calculated? How have the key macroeconomic variables behaved over time? What is the difference between “nominal” and “real” values? How are stock market values related to interest rates? 2-2
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Questions How are interest rates related to the price level and the inflation rate? How is unemployment related to total production? What is right ‐‐ and what is wrong ‐‐ with the key measure of economic activity, real GDP? 2-3
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Economic Statistics and Economic Activity Economic activity is the pattern of transactions in which things of real, useful value are created, transformed, and exchanged. National Income and Expenditure Accounts (NIEA) reported by Statistics Canada 2-4
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The Importance of Data Economists use quantitative data to examine and understand behavior Data can be used in two ways make quantitative forecasts test economic theories 2-5
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Six Key Economic Variables Real Gross Domestic Product (GDP) The unemployment rate The inflation rate The interest rate The level of the stock market The exchange rate 2-6
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Six Key Economic Variables Real Gross Domestic Product (GDP) is corrected for changes in the price level ( real ) includes the replacement of worn out and obsolete equipment and structures as well as new investment ( gross ) counts economic activity that happens in Canada ( domestic ) represents the production of final goods and services ( product ) 2-7
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Six Key Economic Variables Real Gross Domestic Product often divided by the number of workers in the economy measures how well the economy produces goods and services that people find useful does not indicate the relative distribution of the nation’s economic product is an imperfect measure of economic well being 2-8
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Figure 2.1 Real GDP per Worker (1997 prices) in Canada: 1961 2005 2-9
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Figure 2.1 Real GDP per Worker in Canada: 1961 2005 2-10 • Despite temporary setbacks in recessions and depressions - of which the Great Depression of the 1930s was by far the largest - the principal event of the twentieth century was the almost quintupling of measured real GDP per worker.
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Figure 2.1 Real GDP per Worker in Canada: 1961 2005 Other, more recent, macroeconomic events include the 1974 1975 and the 1980 1983 major recessions the 1990 1991 minor recession the two decade long period of stagnation from the early 1970s to the early 1990s the slowdown of 2000 2001 2-11
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The Unemployment Rate to be unemployed , a person must be in the labour force want to work and be actively looking for a job (but have not yet found one) the labour force consists of those who are at least fifteen years old, are not retired, and are either employed or unemployed
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This note was uploaded on 02/12/2011 for the course ECON 302 taught by Professor Alvero during the Spring '09 term at UBC.

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Chap 02_Delong - CHAPTER2 2-1 Questions calculated...

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