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Lecture

ECO102H1 Lecture Notes - Gdp Deflator


Department
Economics
Course Code
ECO102H1
Professor
James Pesando

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Topic 16: Macroeconomics: Introduction
Jan 26th-31st
Outline:
1. Macroeconomics: Overview
2. GDP
2.1 Expenditure Approach
2.2 Factor Incomes Approach
3. Real Versus Nominal GDP
4. Real GDP and Economic Well-being
5. Consumer Price Index
z Overview
Microeconomics: focus on individual firms, households;
Macroeconomics: focus on entire economy
-- IMF: Projections of Real GDP (percentage increase)
2008
2009
2010
2011
Canada
0.4
-2.6
2.7
2.4
US
-0.4
-2.5
2.7
2.4
China
9.6
8.7
10.0
9.7
Russia
5.6
-9.0
3.6
3.4
World
3.0
-0.8
3.9
4.3
Questions (mainly US):
1. Why the dramatic decline in 2009?
2. Why the improvement in 2010 and 2011?
3. In 2011 and 2011, will unemployment fall?
(no; US needs at least 3% economic growth to absorb the increase of workers);
z GDP t Gross Domestic Product
Questions: How do economists measure ^output_?
Answers: GDP (Gross Domestic Product) -- measure of output and of incomes earned to produce output;
-- Insight:
1. Production of output generates income;
2. National Product =(by definition) National Income;
2. Total expenditures on output = Total incomes earned to produce output;
-- Measure using: Expenditure Approach; Factor Incomes Approach
-- GDP:
1. GDP: the market value of all final goods and services produced within a country in a given period of
time, usually a year;
2. Total expenditures = total income earned;
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