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MacroEconomics: Overview
Microeconomics: focus on individual firms, households
Macroeconomics: focus on entire economy
International Monetary Fund (IMF)
January 2011 projections of real GDP (measure of output)
CountryReal GDP Growth
2008 2009 2010 2011
canada 0.4-2.6 2.6 3.6
U.S.0.4-2.5 2.7 2.4
China9.6 8.7 10.0 9.7
Russia5.6-9.0 3.6 3.4
World3.0-0.8 3.9 4.3
Questions (U.S.)
1.why the dramatic decline in 2009?
2.Why the improvement in 2010 and 2011?
3.In 2010 and 2011, will unemployment fall?
How do economists measure “output”?
GDP (Gross Domestic Product):
-The measure of output and of incomes earned to produce output
Insights
1.Total expenditures on output = total incomes earned to produce output
2.Measure using:
i.Expenditure approach
or
ii.Factore incomes approach
1.Formal definition of 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 incomes earned
i.Example: John pays Joan $50 to mow his lawn.
Expenditure (by john) = $50
Income earned (by joan) = $50
ii. Implication: GDP can be measured either by adding
expenditures or by adding incomes earned
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