Econ 102 - Prelim 1 Review - National Output(Income(GDP GNP...

National Output (Income) – (GDP, GNP, etc.)
Chapter 6
 Definition
 Expenditure Approach: Y = C + I + G + (X – M)
o Closed Economy without a Government:
Y = C + I
o Closed Economy with a Government:
Y = C + I + G
 Income Approach (National Income)
 Equivalence of Approaches
 Nominal vs. Real GDP (GDP Deflator)
 Intermediate vs. Final Goods
 Circular Flow of Income

Inflation and Unemployment
Chapter 7
Inflation
 Definition
 Consumer Price Index (CPI)
 Producer Price Index (PPI)
 Base Year and Fixed Weights
 New (Chained) Procedure
Unemployment
 Definitions of Employed (E), Unemployed (U) and
In/Out of Labor Force (LF)
 Labor Force Participation Rate: LF/Pop.
 Unemployment Rate: U/(E + U)
 Types of Unemployment

Goods Market (1)
Chapter 8
 Without a Government
o Aggregate Consumption (C)
o Marginal Propensities to Consume and Save
o Planned Investment (I) vs. Actual Investment
o Planned Inventories are Included in Planned
Investment
o Unplanned Inventories – Key Component of Goods
Market
o Planned Aggregate Expenditures:
AE ≡ C + I
o Aggregate Output (Y) ≡ Real GDP
o Equilibrium: No Tendency for Change
o Equilibrium in the Goods Market: AE = Y
o Importance of 45° Line
o Movement Towards Equilibrium (Increase or
Decrease Production as Response to Unplanned
Inventories)
o Planned Investment Multiplier: 1/(1 – MPC)
 Change in Output (Income):
∆I*{1/(1 – MPC)}
o Injections/Leakages Approach to Equilibrium
 Saving (S)
 Y ≡ C + S and Y = C + I → S = I