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September 23rd - Product Market

September 23rd - Product Market - Our national debt is...

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Tuesday September 23, 2008 First MidTerm Thursday October 2, 7 - 9 pm Make – UP Friday October 3 5pm Product Market Money in system: 13 Trillion Expenditures Goods and service Nation House Holds Taxes (-1 Trillion) (Government spending) Taxes National Business Land, Labor, capital and entre Wages, Salaries, interest, Rent Imports (-1 Trillion) Exports Savings (-1 Trillion) Invest (new equipment, inventory buildup) Factor Market Problems –people don’t just by goods and services so money goes to savings, imports and taxes. These problems are called leakages because this is money leaving the system. These could cause cut backs. Savings go back into the system for money to lend by brokers. Taxes go back to National House Holds and National Business currently going to war, pay for healthcare, military, send aid, and welfare.
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Unformatted text preview: Our national debt is funded by foreign sources. Everything stays in Macro Equilibrium as long as Injections = Leakages we are ok as long as we are offset equally example: Import ≠ Exports Import > Exports Saving = Investment by Companies Saving < Investment by Companies Taxes = Government Spending Injection > Leakages a possibility of Inflation Injection < Leakages a possibility of Resection Measurement Problems 1) Non –Market Activity (home labor) 2) Unreported income (underground economy) 3) International Activity 4) Environmental factors 2/3 comes from legit sources. Real GDP vs. Nominated GDP To compare years we have to use Real GDP. GDP = P x Q (produce more stuff or charge more for the stuff)...
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