Economics 14
- Created by: Gabrielle
- Created on: 30-12-13 12:42
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- The Macroeconomic Environment
- Measurement of GDP
- The market value of all final goods and services produced within a country in a given period of time
- Consumption (household spending)
- Investment in Capital equipment
- Government purchases
- Net Exports (exports - imports)
- Nominal GDP
- the production of goods and services valued at current prices
- Real GDP
- the production of goods and services valued at constant prices
- Consumer Price Index (cost of living)
- A measure of the overall prices of the goods and services bought by a typical consumer
- Problems
- Substitution bias
- New Goods
- Quality change
- People are not typical consumers
- Real & Nominal IR
- Nominal: The interest rate that the bank pays
- Real: The interest rate corrected for inflation
- Real interest rate = Nominal interest rate – Inflation rate
- Productivity is a key determinant of living standards and growth
- Unemployment
- the number of people of working age who are able and available for work at current wage rates and who do not have a job.
- Measured by:
- Claimant Count
- Labour Force Survey
- Trade balance = value of a nation’s exports minus the value of imports
- Y = C + I + G + NX
- Purchasing power parity where a unit of any given currency should be able to buy the same quantity of goods in all countries
- Measurement of GDP
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