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Title: Principles of Macroeconomics Gummerson Notes
Description: Notes from when I took Principles of Macroeconomics with Alan Gummerson at FIU. I easily aced the class Chapter Numbers refer too Paul Krugman's Macro textbook. Blue lines refer too what the professor said, black to powerpoint slides.
Description: Notes from when I took Principles of Macroeconomics with Alan Gummerson at FIU. I easily aced the class Chapter Numbers refer too Paul Krugman's Macro textbook. Blue lines refer too what the professor said, black to powerpoint slides.
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9/9/13
Macroeconomics Ch
...
2
Government spending can be divided into different categories
...
This does not include a transfer payment (social security) because this does not stimulate demand
directly, the money does not require a good or service
Gov’t Purchases+Gov’t Transfers=Gov’t Spending
Gov’t Budget
Tax revenue-Gov’t purchases –Gov’t Transfers=Gov’t budget surplus (deficit if negative)
If the surplus is negative then the government borrows the amount of the deficit by selling treasury
bonds and from other nations, we do not just print more money
...
Trade in goods and services across borders
Selling stocks or buying stocks to the rest of the world then we are not trading Goods and services, so it
does not affect GDP because it is a trade of assets
GDP
Measures the total market value of all final goods and services
Final good services, means goods sold to the ultimate user (the car is the final good, not the windshield
and tires etc
...
Capital goods-long lasting goods used by firms to produce goods
This is counted because it is not used up in the creation of the final good and it is sold to the final user
(the firm)
So one way to calculate the GDP is by adding up all final goods
An easier approach is a value added approach
Starts with the revenue that a firm gets from its final widget
Firm revenue
-cost of intermediate goods
=value added
Eliminates double counting because it subtracts out the value of the intermediate goods
If we add up the value added by every firm in the nation it will be the same answer as if we had added
up all final goods
company
Farmer
Miller
Baker
Revenue
$
...
20
$2
...
00
$
...
20
Value added
$
...
70
$
...
Because goods are produced by machines, most of us work in the service industry so that’s most of what
we buy, we are a service economy
Net Exports
Exports- Imports
Government spending does not include transfers
We are trying to measure production of goods and services so we don’t include transfer payments
We don’t include used goods which are not produced this year
...
A used car salesman’s income does count however, because they are providing a brokerage service
If you refurbish something then the value added adds to the GDP
Don’t include the production of housewives and househusbands because this output is not sold on
markets and it value would be an estimate that would swamp GDP
...
Incomes approach
The income payments to the factors of production (Land , Labor, and Capital) is used to produce the
output will equal the value of the output
Wages+rent+interes+profit= GDP
Why?
The Value added that the firm gets then must be doled out to incomes and rent and the rest is profit etc
...
2
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4
Title: Principles of Macroeconomics Gummerson Notes
Description: Notes from when I took Principles of Macroeconomics with Alan Gummerson at FIU. I easily aced the class Chapter Numbers refer too Paul Krugman's Macro textbook. Blue lines refer too what the professor said, black to powerpoint slides.
Description: Notes from when I took Principles of Macroeconomics with Alan Gummerson at FIU. I easily aced the class Chapter Numbers refer too Paul Krugman's Macro textbook. Blue lines refer too what the professor said, black to powerpoint slides.