Macroeconomic Measurement: Current Approach

1
Macroeconomic Measurement Current Approach

• Chapter 5, Sections 1-4

2
Part II of Course

• How can we evaluate the condition of the
  macro-economy?
• Past, present, even future (forecasts)
• Usual empirical measurements
• Overall output GDP, real GDP
• Labor markets Employment, unemployment rate
• Overall prices Various price indexes (CPI)

3
Who measures them?

• NIPA BEA
• Measurement is based on conventions or
  assumptions (p2)
• Whats counted is whats important in this
  economy!

4
Capital stock conventions

• Resource maintenance manufactured capital
• Investment (I)
• Significance
• Convention newly mfg. capital goods only (see
  footnote, page 5)
• Assumed to be made largely by businesses

5
Gross Domestic Product

• Significance
• Conventional BEA definition p7
• Total value of final goods services
• Newly produced
• In a country
• Over a period of time

6
How are the calculations actually made?

• Recall the Circular Flow
• Three places to take the economys temperature
• Production (value added) p9
• Spending (aggregate demand) p13
• C I G NX
• Income (national income) p15
• Wages rent interest profits sales tx
  depreciaton

7
The Circular Flow
8
Current GDP

• http//www.bea.gov/newsreleases/national/gdp/gdpne
  wsrelease.htm

9
Active learning

• No fault
• GDP exercise