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Macroeconomics Eco111S
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Taking the pulse of the national economy. GROSS DOMESTIC PRODUCT (GDP) ... produced within a geographic area (an economy) in a period of time (usually one year) ... – PowerPoint PPT presentation
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Title: Macroeconomics Eco111S
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MacroeconomicsEco111S
- Lecture Notes Amanda Fitschen
- Period 2 and Meridian
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The South African Economy
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The South African Economy
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The South African Economy
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Equilibrium
- Microeconomics - single market
- Macroeconomics - whole economy
- Withdrawals (W) Injections (J)
- W leave the economy
- W S T M
- J enter the economy
- J I G X
- National income National expenditure
- W J
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Measuring Economic Activity
- Taking the pulse of the national economy
- GROSS DOMESTIC PRODUCT (GDP)
- Total market value of all final goods and
services produced within a geographic area (an
economy) in a period of time (usually one year) - Three methods of calculating GDP
- Production method
- Income method
- Expenditure method
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Income Method
- Factor payments
- LAND RENT
- LABOUR WAGES/SALARIES
- CAPITAL INTEREST
- ENTREPRENEURSHIP PROFIT
- (Compensation to employees plus net operating
surplus)
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Production Method
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Expenditure Method
- Most commonly used method
- Consumption (C)
- Investment (I)
- Government expenditure (G)
- Net exports (exports minus imports) (NX)
- Why the Residual Item in the expenditure method?
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GDP (at factor cost) Plus Other taxes on
production Less Other subsidies on
production Equals GDP (at basic prices) Plus
INDIRECT TAXES Less SUBSIDIES Equals GDP (at
market prices) Gross XYZ Less Depreciation
Equals Net XYZ Gross capital formation Change
in inventories GDP at current prices VERSUS real
GDP
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