2' Data of Macroeconomics

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2. Data of Macroeconomics

• Measuring the value of economic activities
  (Output)
• Gross Domestic Product (GDP) is the total
  market value of all final goods and services
• ? GDP tells us the level of income and
  expenditure
• Measuring the price level
• GDP Deflator
• Consumer price index (CPI)
• Measuring jobless
• Unemployment rate (UR)

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Income, Expenditure, and the Circular Flow
GDP measures the flow of dollars in the economy.
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Nominal GDP and Real GDP

• Nominal GDP (Y) measured at current prices

Nominal GDP1994 (1221)4
Nominal GDP2004 (3462)24 (6 times)
It can change over time because there is a
change in either the amount and the prices of
goods and services

• Real GDP (y) measured at constant prices.

Real GDP2004 (1422)8 (double)
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GDP deflator and CPI

• Measuring the overall level of prices in the
  economy
• GDP Deflator Nominal GDP/Real GDP
• GDP Deflator1994 Nominal GDP1994/Real GDP1994
  4/4 1
• GDP Deflator2004 Nominal GDP2004/Real GDP2004
  24/8 3
• ? Thus, the overall level of prices increases 3
  times.
• Consumer price index (CPI)
• CPI measures the cost of livings
• CPI only includes the prices of the goods and
  services brought by consumers.

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The Components of Expenditures
Y C I G NX
National income accounts identity
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(No Transcript)
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Unemployment Rate

• Unemployment Rate Unemployed/Labor Force
• Labor Force Employed Unemployed
• Labor-force participation rate Labor
  force/Adult population

Not in labor force is persons who do not seek
jobs (e.g., students, retirees, and discouraged
workers)
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Okuns Law
The negative relationship between unemployment
and real GDP
UR 6 ? 8 (2) Real GDP 3 - 2 ? (2)
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In the United States, Percentage Change in Real
GDP3-2?the Change in the Unemployment Rate