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Lecture Assignment 12 - The National Accounts and Other Macro Concepts.pdf

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University of Toronto St. George

1 of 4 pages ECONOMICS 100 Lecture Assignment #12 Introduction to Macroeconomics: The National Accounts and Other Macro Concepts Source: LR13, LR 12, Chapter 19 (exclude international economy until later in the course) and Chapter 20. The derivation in class is not the same as in the text, but the end results are the same! 1. Some Basic Concepts 1. 1 How do you distinguish between Microeconomics and Macroeconomics? 1.2 Here are a number of key macro variables we will be considering: • Aggregate output (GDP) • Rate of inflation • Rate of unemployment • Interest rate • Balance of payments • Exchange rate 1.3 What are the two major policy levers available that can influence these macro variables? 2 of 4 pages 2. Building the Domestic Accounts 1 The following data are from the profit and loss statement of a corporation, adjusted to assist us in building the domestic income and expenditure accounts. Sales $ To households 500 To other Firms re: "consumable" items 100 re: capital goods 200 To government 300 Cost of Goods Sold (CGS) Profits $ Purchases of goods and services (from other firms) 100 Retained 25 Wages, salaries 600 Dividends paid 25 Rents 100 Corporate Profits Tax 50 Interest 100 Indirect taxes - subsidies 50 Depreciation 50 2.1 Rearrange the above data into two columns: Left column to contain CGS plus profits; Right side to contain sales. The 2 columns will be equal. 2.2 Imagine there are 1000 identical firms that make up this economy. Then the totals for the economy would be 1000 times the entries in 1.1. To create incom
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