Hello everybody ,
Today, I am starting to write about Macroeconomy and It will be a long serie . Every day I will share about a economic topic from my course notes . This serie will be a very good source for Macroeconomic components . With this serie you will learn every Basic step by step . Let’s start;
Measuring a Nation’s Income :
Look for the answers to these questions:
•What is Gross Domestic Product (GDP)?
•How is GDP related to a nation’s total income and spending?
•What are the components of GDP?
•How is GDP corrected for inflation?
•Does GDP measure society’s well-being?
We will cover answers of these questions in first Serie .
Economics:
•Microeconomics
–Study of how households and firms
•Make decisions
•Interact in markets
•Macroeconomics
–Study of economy-wide phenomena
•Including inflation, unemployment, and economic growth.
Income and Expenditure
•Gross Domestic Product (GDP)
–Measures total income of everyone in the economy.
–Also measures total expenditure on the economy’s output of goods and services.
•Income equals expenditure
–For the economy as a whole
–Because every dollar a buyer spends
is a dollar of income for the seller.
•The Circular-Flow Diagram
–Simple depiction of the macroeconomy
–Illustrates GDP as spending, revenue,
factor payments, and income
•Preliminaries:
–Factors of production are inputs like labor, land, capital, and natural resources.
–Factor payments are payments to the factors of production (e.g., wages, rent).
What This Diagram Omits
•The government
–Collects taxes, buys goods and services
•The financial system
–Matches savers’ supply of funds with
borrowers’ demand for loans
•The foreign sector
–Trades goods and services, financial assets, and currencies with the country’s residents
That’s the firs part of serie we will continue with What Gross Domestic Product is ?