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Econ 2400 final exam notes

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ECON 2400
Garry Sran

Econ 2400 notes Introduction and measurement issues Chapter 1 IntroductionGDP the quantity of goods and services produced within a countrys borders over a particular period of time Per capita real GDP is a measure of average level of income for Canadian residentNatural logarithm of per capita real GDP is approximately equal to the growth rate of per capita GDP The growth level is the level starting value of whatever is growing The growth rate is the change in the growth level from year to year Basic Structure of a Macroeconomic Model Consumers and firms the set of goods that consumers consume Consumers preferenceThe production technology Resources availableOptimizewe assume that consumers and firms optimizethat is they do the best they can give that constraints they face Competitive Equilibriumwe assume goods are bought and sold on markets in which consumers and firms are price takersMacroeconomic behavior is the sum of many microeconomic decisionsAverage labour productivity is the quantity of aggregate output produced per workerInflation is the rate of change in the average level of pricesConsumer price index CPI is essentially the price of a set of goods bought by the average consumerMoney growth is measured as the percentage rate of growth in the monetary base a narrow monetary aggregateMonetary base is defined as the portion of the commercial banks reserves that are maintained in accounts with their central bank plus the total currency circulating in the publicMoney supply consists of the total currency circulating in the public plus the nonbank deposits with commercial banksEconomic decisions are based on real rather than nominal interest rates Real interest rate is the nominal interest rate minus the expected rate of inflationripe Current Account surplus is the net exports of goods and services CANXXI Current account deficit imports are greater than exportsChapter 2 MeasurementGDP measured using 1 The product approach2 The expenditure approach 3 The income approachAfter tax profitsTotal RevenueWagesInterestCost of Intermediate inputstaxes Product approach is sometime called the valueadded approach The main principle is the product approach is that the GDP is calculated as the sum of value added as the sum of value added to goods and services in production across all productive units in the economyExpenditure approach we calculate GDP as total spending on all final goods and services in the economy GDPCIGNX The Income Approach calculates GDP by adding up all income received by economic agents contributing to production YCIGNX Consumption Largest expenditure component of Canadian GDP It Includes expenditure on consumer goods and services during the current period The Components of Consumption Durable GoodsSemiDurable GoodsNondurable GoodsServiceInvestment Investment is the expenditure on goods that are produced but not consumed during the current periodFixed investmentProduction of Capital such as a factory equipment and housingNonresidential investment adds to the factory equipment that makes up the capital stock for producing goods and servicesResidential InvestmenthousingInventory InvestmentConsists of goods essentially put in storageNet Exports Net exports is the difference between exports and imports NXXI
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