This document provides an overview of key macroeconomic concepts including:
1. Living standards, inflation, and unemployment are discussed as important macroeconomic indicators across countries and over time.
2. GDP, GDP deflator, and real GDP are introduced as measures of economic output, and alternative measures like GNP are mentioned.
3. Classical and Keynesian macroeconomic theories are contrasted, discussing concepts like aggregate demand, aggregate supply, and fiscal/monetary policy approaches.
4. Additional macro topics covered include money supply, international trade, exchange rates, economic growth models, and factors influencing currency movements.
10. Value Added = Sales - Cost of Purchased Materials Cotton $5 5-0 = 5 Shirt-Wholesale 15 15-5 = 10 Shirt-Retail 30 30-15 = 15 30 Sales Value Added
11. Nominal GDP, Real GDP & the GDP Deflator Nominal (Y) = ( P 2005 x Q 2005 ) - (P 2005 x Q 2005 ) [sales] [materials] Real (y) = (P 1997 x Q 2005 ) - (P 1997 x Q 2005 ) GDP Deflator = Nominal GDP/Real GDP Base Year? Chain-Weighted Real GDP
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26. MPN N Rule: Proceed as long as MR > MC Here: MR = P x MPN MC = W N VMP = P x MPN W 0 N D STOP View of Employment (N)
27. What if W Changes? W, VMP N W 0 W 0 ’ N D N D ’ VMP