Chapter Two 1
®
CHAPTER 2
The Data of Macroeconomics
®
A PowerPointTutorial
To Accompany
MACROECONOMICS, 8th. Edition
N. Gregory Mankiw
Tutorial written by:
Mannig J. Simidian
Gross Domestic Product (GDP) is the dollar value of all final goods and services
produced within an economy in a given period of time.
The consumer price index (CPI) measures the level of prices.
Gross Domestic Product
is the best measure of how
well the economy is performing. The Central Bank of
iran calculates GDP via
administrative data
, which
are byproducts of government functions such as tax
collection, education programs, defense, and
regulation, and statistical data, which come from
government surveys of, for example, retail
Two ways of viewing GDP
Total income of everyone in the economy Total expenditure on the economy’s
output of goods and services
Households Firms
Income $
Labor
Goods
Expenditure $
For the economy as a whole, income must equal expenditure. GDP measures the flow of dollars in the economy.
1) To compute the total value of different goods and services, the national income accounts use market prices.
Thus, if
$0.50 $1.00
GDP = (Price of apples Quantity of apples)
+ (Price of oranges Quantity of oranges) = ($0.50 4) + ($1.00 3)
GDP = $5.00
2) Used goods are not included in the calculation of GDP.
4) Intermediate goods are not counted in GDP– only the value of final goods. Reason: the value of intermediate goods is already included in the market price. Value added of a firm equals the value of the firm’s output less the value of the intermediate goods the firm purchases.
The value of final goods and services measured at current prices is called nominal GDP. It can change over time, either because there is a change in the amount (real value) of goods and services or a change in the prices of those goods and services.
Hence, nominal GDP Y = P y, where P is the price level and y is real output—and remember we use output and GDP interchangeably.
Real GDP or, y = YP is the value of goods and services measured using a constant set of prices.
This distinction between real and nominal can also be applied to other monetary values, like wages. Nominal (or money) wages can be denoted by W and decomposed into a real value (w) and a price variable (P).
Hence, W = nominal wage = P • w w = real wage = w/P
This conversion from nominal to real units allows us to eliminate the problems created by having a measuring stick (dollar value) that
Let’s see how real GDP is computed in our apple and orange economy.
For example, if we wanted to compare output in 2011 and output in 2012, we would obtain base-year prices, such as 2011 prices.
Real GDP in 2011 would be:
(2011 Price of Apples 2011 Quantity of Apples) + (2011 Price of Oranges 2011 Quantity of Oranges).
Real GDP in 2012 would be:
(2011 Price of Apples 2012 Quantity of Apples) + (2011 Price of Oranges 2012 Quantity of Oranges).
Real GDP in 2013 would be:
(2011 Price of Apples 2013 Quantity of Apples) + (2011 Price of Oranges 2013 Quantity of Oranges).
Note that 2011 prices are used to compute real GDP for all three years. Because prices are held constant from year to year,
Nominal GDP measures the current dollar value of the output of the economy.
Real GDP measures output valued at constant prices.
The GDP deflator, also called the implicit price deflator for GDP, measures the price of output relative to its price in the base year. It
reflects what’s happening to the overall level of prices in the economy. GDP Deflator = Nominal GDP
Real GDP
Government purchases of goods
and services
Government purchases of goods
and services
Y = C + I + G + NX
Y = C + I + G + NX
Y = C + I + G + NX
Y = C + I + G + NX
Total demand for domestic output (GDP) Total demand for domestic output (GDP) is composed of is composed of Consumption spending by households Consumption spending by households Investment spending by businesses and households Investment spending by businesses and
households Net exports
or net foreign demand
Net exports or net foreign
demand
To see how the alternative measures of income relate to one
another, we start with GDP and add or subtract various quantities. To obtain gross national product (GNP), we add receipts of factor income (wages, profit, and rent) from the rest of the world and
subtract payments of factor income to the rest of the world.
GNP = GDP + Factor Payments from Abroad - Factor Payments to Abroad
Whereas GDP measures the total income produced domestically, GNP measures the total income earned by nationals (residents of a nation). To obtain net national product (NNP), we subtract the depreciation of capital—the amount of the economy’s stock of plants, equipment, and residential structures that wears out during the year:
NNP = GNP – Depreciation
The Consumer Price Index (CPI) turns the prices of many goods and services into a single index measuring the overall level of prices. The Cebtral Bank of Iran weighs different items by computing
the price of a basket of goods and services produced by a typical customer. The CPI is the price of this basket of goods relative to the price
of the same basket in some base year.
The Consumer Price Index (CPI) turns the prices of many goods and services into a single index measuring the overall level of prices. The Cebtral Bank of Iran weighs different items by computing
the price of a basket of goods and services produced by a typical customer. The CPI is the price of this basket of goods relative to the price
Let’s see how the CPI would be computed in our apple and orange economy.
For example, suppose that the typical consumer buys 4 apples and 2 oranges every month. Then the basket of goods consists of 4 apples and 2 oranges, and the CPI is:
CPI = ( 4 Current Price of Apples) + (2 Current Price of Oranges) ( 4 2001 Price of Apples) + (2 2001 Price of Oranges)
In this CPI calculation, 2001 is the base year. The index tells how
مروت
سوتم ط لاس
دنفسا نمهب يد رذآ نابآ رهم ويرهش
ر دادرم ريت دادرخ
هبيدرا تش
درورف ني
123.5 133 131.6 129.9 127.4 124.4 123.4 121.7 119.4 118.9 119 116.9 115.8 1385
18.44 146.2 162.9 158.2 154.8 152.4 148.2 145.7 143.5 140 139.2 138.1 136.3 135.3 1386
22.48 20.21 19.17 19.62 19.13 18.07 17.91 17.25 17.07 16.05 16.60 16.84
مروت هطقن
یا
ناریا رد مروت
The GDP deflator measures the prices of all goods produced, whereas the CPI measures prices of only the goods and services bought by
consumers. Thus, an increase in the price of goods bought only by firms or the government will show up in the GDP deflator, but not in the CPI.
Also, another difference is that the GDP deflator includes only those goods and services produced domestically. Imported goods are not a part of GDP and therefore don’t show up in the GDP deflator.
The labor force is defined as the sum of the employed and unemployed, and the unemployment rate is defined as the percentage of the labor force that is unemployed.
The labor-force participation rate is the percentage of the adult population who are in the labor force.
Unemployment Rate = Number of Unemployed
Labor Force 100
Labor-Force Participation Rate = Labor Force
Chapter Two 19 تیعمج لغاش ( 20547 ) یورین راک ( 24107 ) تیعمج یلااب 10 لاس ( 62598 )
و نیلغاش عMمج اMب تMسا ربارب راک یورین .
لاMس رد ناراکیب
1390
نیلغاش تMیعمج ،
20547
ناراکیب تMیعمج و
3560
رفن رازه
.
روشک لاعف تیعمج سMپ دوب
24107
رازه
.
راک یورین زا جراخ تیعمج تMسا رMفن
38491 .تسا رفن رازه
:
لک هMب راکیب دارفا تبMسن یراکیب خرن راک یورین
100×(24107/3560)= یMراکیMMMب خرMMن
یراکیب خرن
8/14 .تسا دصرد
:
دارفا دصرد راک یورین تMMکراشم خرن راک یورین وزج هک لاسگرزب
100× (62598/24107)=تکMراشMم خرMMن
تMMکراشم خرن
5/38 .
خرن تسا دMMصرد
هدحتم تلاایا رد تکراشم
67 .تسا دصرد
Chapter Two 20 Consumption
Investment
Government purchases
Net Exports
Consumer Price Index (CPI)
Labor Force
Unemployment rate
Labor-force participation rate Gross domestic product (GDP)
National income accounting
Stocks and flows
Value added
Imputed value
