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Some rules for calculation GDP
1. The importance of inventories. Since we want to measure production
in a given year, we add the value of unsold goods to inventories, and
include this value in the GDP calculation.
The Focus of Macro
Macro focuses on the behavior of key macro variables including:
Real GDP a measure of aggregate output income, and spending
( under certain assumptions)
Diagram 1-1 (Real GDP)
Canadian historical data on real GDP
Data on real GDP for C
ECON 202 Midterm 2 Exam
November 14, 2011
Remember, this package only offers a short review of the material that will covered on the midterm.
It is most effective when used in conjunction with your textbook, study guide, and the
UNIVERSITY OF WATERLOO
Department of Economics
Term and Year of Offering: Fall 2011
Course Number and Title: ECON 202 - 001, Macroeconomic
Lecture Times, Building, and Room Number: M, W 2:30
3:50 p.m., DC 1351
Instructors Name, Office Location,
spending need not equal output
saving need do not equal investment
GDP = C+I+G+NX
NX is the trade balance.
From the National Accounting Identity:
Y = C+I+G+NX
Subtract C and G from both sides:
Y C G = I + NX
Recall: S= Y- C G
Chapter 4 Review
Quantity theory of money the quantity of money available (policy
variable of the bank of Canada) determines the price level.
The growth rate of the money supply determines the inflation rate.
Quantity Equation of Money relates the quanti
Money supply measure, 10
Table M3 doesnt include m2+.
Start with the definition of velocity:
V = PY/ M
MV = PY
This is the quantity equation of money.
The rate at which money circulate
We use the nominal GDP as a proxy for total
How income is distributed to L and K
Page 55 loanable funds market equilibrium
The effects of a change in fiscal policy
On slide p60
Start: in eqm at (A)
Shock: G Icrarse, T= T bar
S= Y C G
At R1, S<I or LF ^s < LF ^ D
R increase quantity decrease of
P27 summaries all the product
Page 28 graph.
The Neoclassical Theory of Distribution
How is GDP distributed to labour and the owners of capital?
Page 36 demand for goods & service
C = consumer demand for g &s
I = demand for investment good
G = gov
HH 235 Mondays 4-5pm
CPI vs GDP deflator
The current unemployment rate is 7.3%.
US is over 9%.
Working at a paid job labor force.
Not employed, not looking for work. Not in labor force
House wife, retired people.