ECON 100B Lecture Notes - Lecture 17: Market Clearing, Equation, Budget Constraint
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Econ 100B Lecture 17 - June 07, 2018
Introduction to Macro
●The study of a whole economy
●Macroeconomic phenomenon - rise in gasoline price, income growth, job growth, price
of goods rising, etc.
●These phenomena affect everyone in the economy
●Macroeconomists try to explain these phenomenon, understand how the economy
changes over time and predict how the economy will evolve in the future
●Macroeconomists use data from the past - information of key variables that explain the
state of the economy
●They build models to predict the evolution of an economy
●Some key information that macroeconomists need to build their models
○Gross domestic product (GDP)
■Total income of everyone in the economy or the total expenditure on its
output of goods and services
○Real GDP
■When GDP is adjusted for price level of goods in the economy which
gives an idea of purchasing power of an economy
○Inflation rate
■How fast prices are rising
○Unemployment rate
■Fraction of labor force that is looking for work but is not employed
Real GDP of U.S.
●How does the Real GDP of an economy evolve over time
●Real GDP grows over time
●Real GDP per person = income of the average person in an economy
○= real GDP / total population for each year
●Does not rise continuously
●Periods when there is a dip - recession or depression depending on severity
Inflation rate in the U.S.
●Inflation rate - measures the percentage in the average level of prices from the year
before
●If inflation rate is above zero: prices are rising
●If inflation rate is above below: prices are falling
●When prices are falling, it is also called deflation
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Document Summary
Econ 100b lecture 17 - june 07, 2018. Macroeconomic phenomenon - rise in gasoline price, income growth, job growth, price of goods rising, etc. These phenomena affect everyone in the economy. Macroeconomists try to explain these phenomenon, understand how the economy changes over time and predict how the economy will evolve in the future. Macroeconomists use data from the past - information of key variables that explain the state of the economy. They build models to predict the evolution of an economy. Some key information that macroeconomists need to build their models. Total income of everyone in the economy or the total expenditure on its output of goods and services. When gdp is adjusted for price level of goods in the economy which gives an idea of purchasing power of an economy. Fraction of labor force that is looking for work but is not employed. How does the real gdp of an economy evolve over time.
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