Study Guides (258,502)
CA (124,951)
UTSG (8,541)
ECO (570)
ECO100Y1 (111)

Summary notes 3

12 Pages
302 Views

Department
Economics
Course Code
ECO100Y1
Professor
W.G.Wolfson

This preview shows pages 1-3. Sign up to view the full 12 pages of the document.
ECO100Y1c.doc
Page 1 of 12
Lecture #16 Monday, February 2, 2004
MACROECONOMICS
Output : GDP.
Employment:
employment/unemployment.
Prices: inflation.
NATURAL INCOME ACCOUNTING
Profits = Total Sales Revenue Cost of Goods Sold.
Cost of Goods Sold: wages/salaries, rent, indirect taxes, purchases from other firms, interest,
depreciation.
Profits + Cost of Goods Sold = Total Sales Revenue (Income Earned = Expenditure).
Cost of Good Sold + Profits Total Sales Revenue
Purchase of goods and services * 100 To households 500
Wages, salaries, benefits 600 To businesses: capital 200
Rents 100 To businesses: non-capital * 100
Interest paid 100 To government 300
Indirect Taxes - Subsidies 50
Depreciation 50
Profits
Corporate profits: retained
Corporate profits: dividends
Corporate profits: taxes
Total 1100 Total 1100
Purchase of goods and services and Capital sales to businesses must be netted out.
Cost of Good Sold + Profits Total Sales Revenue
Wages, salaries, benefits 600 Personal Consumption Expenditure (C) 500
Rents 100 Government spending on goods and services 300
Interest 100 Gross Business Investment 200
Corporate profits 100
Domestic Income (at
factor cost)
900 Export - Imports (X - M)
Indirect Taxes -
Subsidies
50
Net Domestic Product
(NDP)
950
Depreciation 50
Households
Firms
Input
Markets
Output
Markets
Total income
earned
Total
expen
diture/production
www.notesolution.com
ECO100Y1c.doc
Page 2 of 12
Gross Domestic
Product (GDP)
1000 Gross Domestic Expenditure (GDE) (at
market prices)
1000
Lecture #17 Monday, February 9, 2004
INTERMEDIATE SALES AND VALUED ADDED
Example
Sales Purchase From Other Firms Value Added
Wheat 10 10
Flour 25 10 15
Bread 50 25 25
85 35 50
Proper contribution = 50.
Bread is the final product (brought by consumers).
REAL VS. NOMINAL
Real: Figures adjusted for average price increases and inflation.
Nominal: Figures not adjusted for average price increases and inflation.
PRICE INDEX
Helps determine whether increases in GDP is prices or production.
Examples
GDP deflator, CPI (consumer price index).
Challenges
Changing prices.
Weighting what is more important?
What is included? What is not included?
New/changing products.
GDP VS. GNP
Gross Domestic Product
Measures economic activities.
Ignores who owns the factors of production.
Gross National Product
Concentrates on who owns the assets tracing where profits goes.
www.notesolution.com
ECO100Y1c.doc
Page 3 of 12
OUTPUT/GDP GAP
Potential GDP vs. Actual GDP.
Employment vs. Unemployment.
LABOUR FORCE
UELF
+
=
.
LF
U
U=
rate.
Issues
Full employment = no unemployment? No. There is always frictional unemployment (between jobs).
Definition of unemployment differ country to country:
US: not active = not in labour force
Canada: no jot = unemployment
KEYNESIAN MODEL
MXGICGDP
+
+
+
=
.
Assumptions
Only C and I G, X, M = 0.
No inflation nominal = real.
More output until YF (full employment GDP).
HOUSEHOLDS AND CONSUMPTION
C = C(income, assets/wealth, interest rate). Well use C = C(Y).
0>
Y
C because higher income, more stuff. This rate is called the marginal propensity to consume (MPC).
Also, 1<=
MPC
Y
C.
CYS
=
savings is what is not spent.
1
=
+
MPSMPC.
AS
Y
P
YF
www.notesolution.com

Loved by over 2.2 million students

Over 90% improved by at least one letter grade.

Leah — University of Toronto

OneClass has been such a huge help in my studies at UofT especially since I am a transfer student. OneClass is the study buddy I never had before and definitely gives me the extra push to get from a B to an A!

Leah — University of Toronto
Saarim — University of Michigan

Balancing social life With academics can be difficult, that is why I'm so glad that OneClass is out there where I can find the top notes for all of my classes. Now I can be the all-star student I want to be.

Saarim — University of Michigan
Jenna — University of Wisconsin

As a college student living on a college budget, I love how easy it is to earn gift cards just by submitting my notes.

Jenna — University of Wisconsin
Anne — University of California

OneClass has allowed me to catch up with my most difficult course! #lifesaver

Anne — University of California
Description
ECO100Y1c.doc Lecture #16 Monday, February 2, 2004 M ACROECONOMICS Output : GDP. Households Employment: Total income Total employmentunemployment. earned expenditureproduction Prices: inflation. Input Output Markets Markets Firms N ATURAL INCOME A CCOUNTING Profits = Total Sales Revenue Cost of Goods Sold. Cost of Goods Sold: wagessalaries, rent, indirect taxes, purchases from other firms, interest, depreciation. Profits + Cost of Goods Sold = Total Sales Revenue (Income Earned = Expenditure). Cost of Good Sold + Profits Total Sales Revenue Purchase of goods and services * 100 To households 500 Wages, salaries, benefits 600 To businesses: capital 200 Rents 100 To businesses: non-capital * 100 Interest paid 100 To government 300 Indirect Taxes - Subsidies 50 Depreciation 50 Profits Corporate profits: retained Corporate profits: dividends Corporate profits: taxes Total 1100 Total 1100 Purchase of goods and services and Capital sales to businesses must be netted out. Cost of Good Sold + Profits Total Sales Revenue Wages, salaries, benefits 600 Personal Consumption Expenditure (C) 500 Rents 100 Government spending on goods and services 300 Interest 100 Gross Business Investment 200 Corporate profits 100 Domestic Income (at 900 Export - Imports (X - M) factor cost) Indirect Taxes - 50 Subsidies Net Domestic Product 950 (NDP) Depreciation 50 Page 1 of 12 www.notesolution.com ECO100Y1c.doc Gross Domestic 1000 Gross Domestic Expenditure (GDE) (at 1000 Product (GDP) market prices) Lecture #17 Monday, February 9, 2004 INTERMEDIATE S ALES AND VALUED ADDED Example Sales Purchase From Other Firms Value Added Wheat 10 10 Flour 25 10 15 Bread 50 25 25 85 35 50 Proper contribution = 50. Bread is the final product (brought by consumers). R EAL VS . NOMINAL Real: Figures adjusted for average price increases and inflation. Nominal: Figures not adjusted for average price increases and inflation. P RICE NDEX Helps determine whether increases in GDP is prices or production. Examples GDP deflator, CPI (consumer price index). Challenges Changing prices. Weighting what is more important? What is included? What is not included? Newchanging products. GDP VS. GNP Gross Domestic Product Measures economic activities. Ignores who owns the factors of production. Gross National Product Concentrates on who owns the assets tracing where profits goes. Page 2 of 12 www.notesolution.com
More Less
Unlock Document


Only pages 1-3 are available for preview. Some parts have been intentionally blurred.

Unlock Document
You're Reading a Preview

Unlock to view full version

Unlock Document

Log In


OR

Don't have an account?

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


OR

By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.


Submit