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Main topics in Managerial Economics are Demand, Elasticity, Supply, Markets, Efficiency and Cost, Monopoly, Pricing Policy, Strategic Thinking, Imperfect Market, Basic Macroeconomics, Modern Macroeconomic Issues I. This lecture includes: Basic Macroeconomics, Major Macroeconomic Problems, Measure National Income, Gross Domestic Product, Consumption, Government Purchases, Unemployment Rate, Frictional Unemployment, Calculating Inflation Rate, Money Multiplier, Real Exchange Rate, Shifts, Contract
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Sovereign Bond Crisis in Europe QE policy in America Debt Ceiling and Fiscal Cliff in America Soft Landing in China Abenomics in Japan
How to Measure National Income? Gross Domestic Product (GDP) Gross National Product (GNP) GDP (Purchasing Power Parity)
Gross domestic product (GDP) is a measure of the income and expenditures of an economy. It is the total “M arket value” of “ all final” “goods and services” “produced” “ within a country” in a “ given period of time”.
Consumption (C) : The spending by households on goods and services, with the exception of purchases of new housing. Investment (I) : The spending on capital equipment, inventories, and structures, including new housing.
Government Purchases (G) : The spending on goods and services by local, state, and federal governments. Does not include transfer payments because they are not made in exchange for currently produced goods or services. Net Exports (NX): Exports minus imports.
GNP is the total income earned by a nation’s permanent residents. It differs from GDP by including income that citizens earn abroad and excluding income that foreigners earn here.
Unemployment rate = Number unemployed Labor force 100
The consumer price index (CPI) is a measure of the overall cost of the goods and services bought by a typical consumer.
Fix the Basket Find the Prices Compute the Basket’s Cost Choose a Base Year and Compute the Index
Consumption increases Investment increases Government purchase increases Net export increases
Autonomous consumption spending Derived consumption spending =c*(disposable income) C: marginal propensity to consume Disposable income= income - tax
Copyright©2003 Southwestern/Thomson Learning Quantity of Loanable Funds Real Interest Rate Supply of loanable funds (from national saving) Demand for loanable funds (for domestic investment and net capital outflow) Equilibrium quantity Equilibrium real interest rate docsity.com
Money supply Money demand