EC4004Lecture 13

Introduction to Macroeconomics

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Micro. O-vah.

Macro Weeks 7 - 12

#

Ready?

6.7 Billion

300 born

Every.

Minute.

1/10 Born to Teenagers

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16/300

<5.

1 Mother will die

40,000 per month

2.3 billion tons of carbon dioxide

Per Month.

1/2

3 Tonnes

3 Tonnes

$65.61 trillion

2%

30%

4%

10% is Arable.

250,000km

322 Boundaries

194 independent states and 70 dependencies

Ethnicity

Culture

Race

Language

8.6 million refugees

87%

66

/<#>

Macroeconomics

Study of Economy as a whole

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All Households

All Firms

Government

Measure Output Each Year

ProduceConsume

InvestExportImport

GDP: Sum of all final goods and services produced in the economy

Example.

10* Guns20* Butter

Pguns = €10Pbutter = €5Value of output: 10*10+20*5 = 200

Growth of GDP

Growth rate of real GDP for year t=

(( Yt− Yt−1)/ Yt−1)− 1

Multiply by 100 to get the growth rate of real GDP in percent per year.

Example: Y2006=105; Y2005=100

Growth Rate = 105-100/100-1*100 =5%

Real GDP

Multiply each year’s quantity of output of each good by the price of the good in a base year.

GDP in constant Euros

Chain-weighted real GDP

(nominal GDP)/(implicit price level) = real GDP

or

implicit price level = (nominal GDP)/(real GDP)

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Growth TheoryRead Barro Chapters 2&3

EC4004Lecture 13

Introduction to Macroeconomics