NATIONAL INCOME
MACROECONOMICS indicators
OBJECTIVES AccountDeficit
Full employment unemploymentrate External balance in
Current as a
-
I exports imports GDP
*
very important percentage of
price stability -
consumer price index
(CPI) * Net Foreign Debt as a percentage at
GDP
Economic Growth -
Gross Domestic Product (GDP)
Exchange rate
*
CIRCULAR FLOW Y
-
OF INCOME
1:investment
spending S:Savings
x
very important HH Firms G:government spending 7:taxation
I
x
export earning
=
M:
import spending
***2
1:consumer y:i ncome
C
spending
-
I
-
S
D Financial institution
(withdrawal)
->
theory explaining the relationship
leakages between major sector of
economy
injection
- -
B T ↓ and money flows between them,
G
A Government =>
snow determined
how income is
S+ T M
+
I G
+ +
X
- -
X
I M
D overseas
+G x
Equilibrium:S+T+M=I
+
Disequilibrium:
s 1 + Mc I G x inflation StT+M>I G + x +
nemploymentP, inflation b
· + + + - · +
CD national income I ↳o national income b
b 4
↳
unemployment a unemployment
hi inflation 4 as inflation o
4
imports 4 as
and &
G export import - and expon
As a result... As a result...
~
Economic growth
-
achieved v ~
Economic growth
- not achieved
(because national income 4) ~
Price stability -
not achieved
Full employment
-
X
stability
~
~
Price - nota chieve
I because pricey, inflation)
~
external balance -
achieved
full employment - achieved v
~
(because unemployment b)
~
external balance - not achieved X
(because import > export)
Determine if macro objective achieve or not:
I inflation --
price stability X
i
unemployment-> full employmentX
D S+T+M FI+G +X- economic growth x
1) X <M-p external palance X
Made By StudyWithA
, National off low of and of time
income measure monetary value output ofgoods services produced in an
economy over a period
OR
NATIONAL -
flow ofgoods and services by a nation over a period of
time, usually a
year
INCOME or total paymentreceived by the factors of
production in a
country arring a
year
Measuring national income
indicator:G DP
information about
collecting production of
adding up income income method method firm and government body, calculating
product - each
earned by every individual
↑ p total value
in
economy measuring
GDP focus
↓ example * on forms and add up all production
compensation (wages, salary...
↓
->
proprietor income by income
to (earn
method
*
corporate profite (stakeholden expenditure -> involve
calculating the total value
income ↓ of final and
o rental expenditure a goods
-
neti nterest
-
very GDP C + 1 + G NX service produced
+
=
important
GDPUS GNP
Gross domestic product (GDP) Gross national Product (GNP)
->
total value of output in an and is used to measure & value goods and
of services produced by one and only a
economy
change in economic activities country citizens but both domestically and abroad
-> includes
outputofforeign owned businesses that are located
in a country following foreign direct investment
important
AGGREGATE AD C
= 1
+
G (X M)
+
+ -
AD:t otal amounto fgoods and services demanded in economy ata
given time and price level
OR
*
DEMAND X -
M NX=
:total planned real expenditure on country'sgoods and services
produced within an economy
level
price
in each time period
Why is curve like that?
to real income effect -> PG, real value of income, consumer can buy more
&-o ADP
↳D ↓ in
price
-
consumer spending
AD
national to trade
balance of effect -> 4
exports. ↑ AB
D
output ↳
price
to interest rate to to
investment- real exchange & net export & AD 4
to interest rate effect - Pd, demand, saving 4 loan 4 interest rate
Li ↓ P- 4 interest rated to demand investment o n AD
saving
shift in AD
ADI -> shiftr ight ADD to shif left
# ↓ taxes to consumer spending * 4T - C
⑱
* 4G to G
* 4 in money supply (interest rate a A & interest rate 4 investment, consumer save
money supply to
more
LD direct investment ·
price
price
o
ADz
⑨
A'output
AD I Are
Made By StudyWithA
A
cutpril
MACROECONOMICS indicators
OBJECTIVES AccountDeficit
Full employment unemploymentrate External balance in
Current as a
-
I exports imports GDP
*
very important percentage of
price stability -
consumer price index
(CPI) * Net Foreign Debt as a percentage at
GDP
Economic Growth -
Gross Domestic Product (GDP)
Exchange rate
*
CIRCULAR FLOW Y
-
OF INCOME
1:investment
spending S:Savings
x
very important HH Firms G:government spending 7:taxation
I
x
export earning
=
M:
import spending
***2
1:consumer y:i ncome
C
spending
-
I
-
S
D Financial institution
(withdrawal)
->
theory explaining the relationship
leakages between major sector of
economy
injection
- -
B T ↓ and money flows between them,
G
A Government =>
snow determined
how income is
S+ T M
+
I G
+ +
X
- -
X
I M
D overseas
+G x
Equilibrium:S+T+M=I
+
Disequilibrium:
s 1 + Mc I G x inflation StT+M>I G + x +
nemploymentP, inflation b
· + + + - · +
CD national income I ↳o national income b
b 4
↳
unemployment a unemployment
hi inflation 4 as inflation o
4
imports 4 as
and &
G export import - and expon
As a result... As a result...
~
Economic growth
-
achieved v ~
Economic growth
- not achieved
(because national income 4) ~
Price stability -
not achieved
Full employment
-
X
stability
~
~
Price - nota chieve
I because pricey, inflation)
~
external balance -
achieved
full employment - achieved v
~
(because unemployment b)
~
external balance - not achieved X
(because import > export)
Determine if macro objective achieve or not:
I inflation --
price stability X
i
unemployment-> full employmentX
D S+T+M FI+G +X- economic growth x
1) X <M-p external palance X
Made By StudyWithA
, National off low of and of time
income measure monetary value output ofgoods services produced in an
economy over a period
OR
NATIONAL -
flow ofgoods and services by a nation over a period of
time, usually a
year
INCOME or total paymentreceived by the factors of
production in a
country arring a
year
Measuring national income
indicator:G DP
information about
collecting production of
adding up income income method method firm and government body, calculating
product - each
earned by every individual
↑ p total value
in
economy measuring
GDP focus
↓ example * on forms and add up all production
compensation (wages, salary...
↓
->
proprietor income by income
to (earn
method
*
corporate profite (stakeholden expenditure -> involve
calculating the total value
income ↓ of final and
o rental expenditure a goods
-
neti nterest
-
very GDP C + 1 + G NX service produced
+
=
important
GDPUS GNP
Gross domestic product (GDP) Gross national Product (GNP)
->
total value of output in an and is used to measure & value goods and
of services produced by one and only a
economy
change in economic activities country citizens but both domestically and abroad
-> includes
outputofforeign owned businesses that are located
in a country following foreign direct investment
important
AGGREGATE AD C
= 1
+
G (X M)
+
+ -
AD:t otal amounto fgoods and services demanded in economy ata
given time and price level
OR
*
DEMAND X -
M NX=
:total planned real expenditure on country'sgoods and services
produced within an economy
level
price
in each time period
Why is curve like that?
to real income effect -> PG, real value of income, consumer can buy more
&-o ADP
↳D ↓ in
price
-
consumer spending
AD
national to trade
balance of effect -> 4
exports. ↑ AB
D
output ↳
price
to interest rate to to
investment- real exchange & net export & AD 4
to interest rate effect - Pd, demand, saving 4 loan 4 interest rate
Li ↓ P- 4 interest rated to demand investment o n AD
saving
shift in AD
ADI -> shiftr ight ADD to shif left
# ↓ taxes to consumer spending * 4T - C
⑱
* 4G to G
* 4 in money supply (interest rate a A & interest rate 4 investment, consumer save
money supply to
more
LD direct investment ·
price
price
o
ADz
⑨
A'output
AD I Are
Made By StudyWithA
A
cutpril
