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1CHAPTER 2The Data of MacroeconomicsThe Data of MacroeconomicsChapter 2
2CHAPTER 2The Data of MacroeconomicsIN THIS CHAPTER, YOU WILL LEARN:…the meaning and measurement of the most important macroeconomic statistics:§gross domestic product (GDP)§the consumer price index (CPI)§the unemployment rate2
3CHAPTER 2The Data of MacroeconomicsGross Domestic Product: Expenditure and IncomeTwo definitions:§Total expenditure on domestically-produced final goods and services.§Total income earned by domestically-located factors of production. Expenditure equals income because every dollar a buyer spendsbecomes income to the seller.
4CHAPTER 2The Data of MacroeconomicsThe Circular FlowHouseholdsFirmsGoodsLaborExpenditure ($)Income ($)
CHAPTER 2The Data of Macroeconomics
6CHAPTER 2The Data of MacroeconomicsNOW YOU TRYIdentifying value added§A farmer grows a bushel of wheat and sells it to a miller for $1.00. §The miller turns the wheat into flour and sells it to a baker for $3.00. §The baker uses the flour to make a loaf of bread and sells it to an engineer for $6.00. §The engineer eats the bread. Compute value added at each stage of production and GDP6
7CHAPTER 2The Data of Macroeconomics
8CHAPTER 2The Data of Macroeconomics
9CHAPTER 2The Data of Macroeconomics
10CHAPTER 2The Data of MacroeconomicsU.S. consumption, 201146.916.57.771.17,0792,4841,16310,726ServicesNondurablesDurablesConsumption% of GDP$ billions
11CHAPTER 2The Data of MacroeconomicsInvestment (I)§Spending on capital, a physical asset used in future production §Includes:§Business fixed investmentSpending on plant and equipment§Residential fixed investmentSpending by consumers and landlords on housing units §Inventory investmentThe change in the value of all firms’ inventories
12CHAPTER 2The Data of MacroeconomicsU.S. Investment, 20188.8.131.52.7463381,5321,916InventoryResidentialBusiness fixedInvestment% of GDP$ billions