Post on 10-Jan-2016
description
Introduction to Introduction to macroeconomics and national macroeconomics and national
income accountingincome accounting
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JOIN KHALID AZIZJOIN KHALID AZIZ
ECONOMICS OF ICMAP, ICAP, MA-ECONOMICS, ECONOMICS OF ICMAP, ICAP, MA-ECONOMICS, B.COM.B.COM.FINANCIAL ACCOUNTING OF ICMAP STAGE FINANCIAL ACCOUNTING OF ICMAP STAGE 1,3,4 ICAP MODULE B, B.COM, BBA, MBA & 1,3,4 ICAP MODULE B, B.COM, BBA, MBA & PIPFA.PIPFA.COST ACCOUNTING OF ICMAP STAGE 2,3 ICAP COST ACCOUNTING OF ICMAP STAGE 2,3 ICAP MODULE D, BBA, MBA & PIPFA.MODULE D, BBA, MBA & PIPFA.
CONTACT:CONTACT:0322-33857520322-33857520312-23028700312-2302870R-1173,ALNOOR SOCIETY, BLOCK R-1173,ALNOOR SOCIETY, BLOCK 19,F.B.AREA, KARACHI, PAKISTAN.19,F.B.AREA, KARACHI, PAKISTAN.
33
JOIN KHALID AZIZJOIN KHALID AZIZ
Crash Classes of ICMAPCrash Classes of ICMAP
Stage 1. Fundamentals of Financial Stage 1. Fundamentals of Financial AccountingAccounting
Stage 2. Cost AccountingStage 2. Cost Accounting
In Just 20 Classes.In Just 20 Classes.
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Macroeconomics is ...Macroeconomics is ...
the study of the economy as a wholethe study of the economy as a whole
it deals with broad aggregatesit deals with broad aggregates
but uses the same style of thinking about but uses the same style of thinking about economic issues as in microeconomics.economic issues as in microeconomics.
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Some key issues in macroeconomicsSome key issues in macroeconomics
InflationInflation
– the rate of change of the general price levelthe rate of change of the general price level
UnemploymentUnemployment
– a measure of the number of people looking for work, a measure of the number of people looking for work,
but who are without jobsbut who are without jobs
OutputOutput
– real gross national product (GNP) measures total real gross national product (GNP) measures total
income of an economyincome of an economy
it is closely related to the economy's total outputit is closely related to the economy's total output
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More key issues in macroeconomicsMore key issues in macroeconomics
Economic growthEconomic growth– increases in real GNP, an indication of the increases in real GNP, an indication of the
expansion of the economy’s total outputexpansion of the economy’s total output
Macroeconomic policyMacroeconomic policy– a variety of policy measures used by the a variety of policy measures used by the
government to affect the overall performance government to affect the overall performance of the economyof the economy
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Inflation in the UK, 1950-99Inflation in the UK, 1950-99
0
5
10
15
20
25
30
% p
.a.
Source: Economic Trends Annual Supplement, Labour Market Trends
88
Inflation in selected European countriesInflation in selected European countries
0 1 2 3 4 5
% change 1998 compared with 1997
Greece
Portugal
Italy
Spain
UK
Finland
EU
Belgium
France
Germany
99
Inflation in UK, USA and GermanyInflation in UK, USA and Germany
0
2
4
6
8
10
12
14
16
% p
.a.
1960-73 1973-81 1981-90 1990-98
UK USA Germany
1010
Unemployment in the UK, 1950-99Unemployment in the UK, 1950-99
0
2
4
6
8
10
12
14
% p
.a.
Source: Economic Trends Annual Supplement, Labour Market Trends
1111
UnemploymentUnemploymentin selected European countriesin selected European countries
0 5 10 15 20
% unemployment (ILO measure) 1998
Greece
Portugal
Italy
Spain
UK
Finland
EU
Belgium
France
Germany
1212
UnemploymentUnemploymentin UK, USA and Germanyin UK, USA and Germany
0
2
4
6
8
10
% p
.a.
1960-73 1973-81 1981-90 1990-98
UK USA Germany
1313
Economic growthEconomic growthin UK, USA and Germanyin UK, USA and Germany
0
1
2
3
4
5
% p
.a.
1960-73 1973-81 1981-90 1990-98
UK USA Germany
1414
The circular flow of income, The circular flow of income, expenditure and outputexpenditure and output
Y
Households Firms
C + I
I
CS
1515
Government in the circular flowGovernment in the circular flow
Y
C + I + G
I
CS
Households FirmsGovernment
C + I + G - Te
Te
G
B - Td
Y + B - Td
1616
Adding the foreign sectorAdding the foreign sector
To incorporate the foreign sector into the To incorporate the foreign sector into the circular flowcircular flow
we must recognize that residents of a we must recognize that residents of a country will buy imports from abroadcountry will buy imports from abroad
and that domestic firms will sell (export) and that domestic firms will sell (export) goods and services abroad.goods and services abroad.
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GDP and GNPGDP and GNP
Gross domestic product (GDP)Gross domestic product (GDP)– measures the output produced by factors of measures the output produced by factors of
production located in the domestic economyproduction located in the domestic economy
Gross national product (GNP)Gross national product (GNP)– measures the total income earned by measures the total income earned by
domestic citizensdomestic citizens
GNP = GDP + net income from abroadGNP = GDP + net income from abroad
1818
Three measures of national outputThree measures of national output
ExpenditureExpenditure– the sum of expenditures in the economythe sum of expenditures in the economy– Y = C + I + G + X - ZY = C + I + G + X - Z
IncomeIncome– the sum of incomes paid for factor servicesthe sum of incomes paid for factor services– wages, profits, etc.wages, profits, etc.
OutputOutput– the sum of output (value added) produced in the sum of output (value added) produced in
the economythe economy
1919
National income accounting: a summaryNational income accounting: a summary
GNP(andGNI)
atmarketprices
GDPat
marketprices
NYA
C
X - Z
I
NYA
G
NNPat basicprices
Deprec'n
Nationalincome
Indirect taxes
Wagesand
salaries
Self-employment
Profits,rents
2020
What GNP does and does not measureWhat GNP does and does not measure
Some care is needed:Some care is needed:– to distinguish between to distinguish between realreal and and nominalnominal
measurementsmeasurements– to take account of population changesto take account of population changes– to remember that GNP is not a to remember that GNP is not a
comprehensive measure of everything that comprehensive measure of everything that contributes to economic welfarecontributes to economic welfare
2121
JOIN KHALID AZIZJOIN KHALID AZIZ
ECONOMICS OF ICMAP, ICAP, MA-ECONOMICS, ECONOMICS OF ICMAP, ICAP, MA-ECONOMICS, B.COM.B.COM.FINANCIAL ACCOUNTING OF ICMAP STAGE FINANCIAL ACCOUNTING OF ICMAP STAGE 1,3,4 ICAP MODULE B, B.COM, BBA, MBA & 1,3,4 ICAP MODULE B, B.COM, BBA, MBA & PIPFA.PIPFA.COST ACCOUNTING OF ICMAP STAGE 2,3 ICAP COST ACCOUNTING OF ICMAP STAGE 2,3 ICAP MODULE D, BBA, MBA & PIPFA.MODULE D, BBA, MBA & PIPFA.
CONTACT:CONTACT:0322-33857520322-33857520312-23028700312-2302870R-1173,ALNOOR SOCIETY, BLOCK R-1173,ALNOOR SOCIETY, BLOCK 19,F.B.AREA, KARACHI, PAKISTAN.19,F.B.AREA, KARACHI, PAKISTAN.