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Microeconomics pressentation slides on the exploration of 5 different countries

Microeconomics pressentation slides on the exploration of 5 different countries

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  • 1. MACROECONOMICS: QUESTION 1 PERFORMANCE ANALYSIS AND REPORT OF FOUR EUROPEAN ECONOMIES
  • 2. SECTION 1 INTRODUCTION SECTION 2 GROSS DOMESTIC PRODUCT SECTION 3 INFLATION SECTION 4 POPULATION SECTION 5 UNEMPLOYMENT SECTION 6ECONOMIC REPORT OF IRELAND SECTION 7 CONCLUSION
  • 3. INTRODUCTIONWHAT IS ECONOMCIS? ECONOMICS IS DEFINED AS “A SCIENCE WHICH STUDIES HUMAN BEHAVIOUR AS A RELATIONSHIP BETWEEN SCARCE MEANS THAT HAVE ALTERNATIVE USES” ROBBINS (1932).MACROECONOMICS: Relates to the study of an economy as a whole. Analyses the behaviorand performance of an economy in general by dealing with topics such as inflationunemployment and interest rates.MICROECONOMICS: Is the Second branch of economics which analyses the behavior ofindividual consumers and firms within an economy. Generally concerned with the interactionand factors that have influence between buyers and sellers
  • 4. GROSS DOMESTIC PRODUCT GROSS DOMESTIC PRODUCT (GDP) is the total market value of final goods and services produced within the borders of a nation during a fixed period of time. Formula for Calculating GDP: Y = C + I + G + X - M GDP = : Consumer Spending + Investment + Excess of Exports Over Imports + Government SpendingReal GDP: Measurement of economic output produced within a economy for a specific timeframe adjusted for price changes within a market such as INFLATION and DEFLATION.Nominal GDP : Also known as current dollar GDP, the total output produced by an economyfor a specific time frame NOT adjusted for INFLATION or DEFLATION
  • 5. GROSS DOMESTIC PRODUCTMETHODS OF CALCULATING GDP
  • 6. THE INCOME APPROACHTHE INCOME APPROACH SUMS THE INCOME RECEIVED BY ALL PRODUCERS IN THE COUNTRYWITHIN A SPECIFIC TIME FRAME. IT MEASURES GDP AS THE COMBINED SUM OF INCOMESFROM THE FOUR MAIN FACTORS OF PRODUCTION WHICH INCLUDE:WAGESRENTINTERESTPROFIT / REVENUE Source http://www.studyforex.com {accessed 10th November 2011)
  • 7. THE VALUE ADDED APPROACHTHE VALUE ADDED APPROACH MEASURES GDP AS THE SUM OF THE VALUE-ADDED TO THEPRODUCT OR SERVICE AT ALL STAGES OF THE PRODUCTION PROCESS. THE VALUE ADDEDAPPROACH IS A METHOD THAT ELEIMATES THE ERROR OF DOUBLE COUNTING WHENCALCULATING GDPEXAMPLE: VALUE IS ADDED TO WOOD WHENCUT FROM A TREE INTO LOGSSANDED INTO USABLE WOOD PIECESMANUFACTURED INTO CABNITES OR TABLESSOLD TO A CONSUMERTHIS METHOD ISNT AS WIDELY USED DUE TO THE FACT THAT DOUBLE COUNTING AND ANEXAGGERATION OF THE TRUE MARKET VALUE OF GDP OCCURS QUET FREIQUENTLY Source http:/ http://www.studyforex.com {accessed 10th November 2011)
  • 8. THE EXPENDITURE APPROACHTHE EXPENDITURE IS ONE OF THE THREE MAIN METHODS OF CALCULATING GDP THEEXPENDITURE APPROACH MEASURES GDP BY CALCULATING THE FINAL SPENDING ONGOODS AND SERVICES. THE EXPENDITURE APPROACH CALCULATES BY ADDING THE FOURMAIN TYPES OF EXPENDITURE WHICH ARE KOWN AS:CONSUMPTIONINVESTMENTGOVERNMENT SPENDINGNET EXPORTS Source http://www.studyforex.com {accessed 10th November 2011)
  • 9. ADVANTAGES OF GROSS DOMESTIC PRODUCTUNIVERSAL & EASY TO COMPARE: DUE TO THE FACT THAT MOST NATIONS USE THEMESURMENT GDP IT IS EASY TO COMPARE, IF REAL GDP IS CALCULATED THE GROWTHPERCENTAGES WITH OTHER NATIONS FOR A SPECIFIC YEAR CAN BE COMPAREDESTIMATES TOTAL NUMBER OF PRODUCTION: GROSS DOMESTIC PRODUCT HELPS TOCALCULATE AND COMPARE THE TOTAL NUMBER OF PRODUCTION RECOURSES FOR ASPECIFIC YEARCALCULATES NATIONAL INCOME: PROVIDES A METHOD FOR CACULATING NATIONAL INCOMEOF A SPECIFIC EOCNOMY FOR A TIME PERIOUD WHICH CAN PROVE USEFUL TOGOVERNMENTS WHEN MAKING MACRO ECONOMIC DECISIOSSource https://mywebspace.wisc.edu {accessed 10th November 2011}
  • 10. LIMITATIONS OF GROSS DOMESTICPRODUCT DOESN’T TAKE INTO ACCOUNT THE UNDERGROUND ECONOMY: BUSINESS THAT TAKES PLACE UNLAWFULLY WITH TAX AND VAT NOT PASSED ON TO THE GOVERNMENT ON THE PRODUCTS OR SERVICES SOLD. EXAMPLE THE SALE OF FAKE DESIGNER CLOTHING. THIS KIND OF TRAIDING LARGELY POPULAR IN GREECE, AND MANY 3RD WORLD COUNTRIES WITHIN AFRICA WHERE TAX SYSTEMS ARE NOT 100% IMPLEMENTED THEREFORE CANNOT BE ACCOUNTED IGNORES HOUSEHOLD PRODUCITON: PRODUCTS OR SERVICES YOU MIGHT PRODUCE FOR YOUR INDIVUDAL NEEDS OR WANTS, EXAMPLE BABYSITTING, OR TUTION SERVICE DOESN’T FACTOR IN CHANGES IN LIFESPAN OF GOODS: FAILS TO RECOGNISE THE ADVANCED RESEARCH INVESTED IN PRODUCING BETTER QULITY PRODUCTS THAT HAVE LONGER LIFE SPANS FOR EXAMPLE A CAR THAT LASTS 10 YEARS. Source https://mywebspace.wisc.edu {accessed 10th November 2011}
  • 11. INFLATION INFLATION IS SIMPLY DEFINED AS AN UPWARD MOVEMENT IN THE AVERAGE LEVEL OF PRICES. Kaplan (2009) MACROECONOMICS IN GENERALLY CONCERNED WITH THE AGGREGATE CHANGE WITH THE LEVEL OF PRICE, WHICH IS MESURED USING A PRICE INDEX THAT HAS A WEIGHTED AVERAGE OF THE INDIVIDUAL PRICES INCLUDED IN IT.CURRENTLY THERE IS MAJOR INFLATION INIRELAND WITH THE PRICES OF,• Clothing• Computers• PetrolDUE TO THE HIGH DEMAND AND LOW SUPPLY
  • 12. DEFLATIONACCORDING TO KAPLAN( 2009) THE TERM DEFLATION IS DEFINED AS A DOWNWARDMOVEMENT IN THE AVERAGE LEVEL OF PRICES.CURRENTLY WE ARE EXPERIENCING DEFLATION IN A NUMBER OF SECTORS IN THEREPUBLIC OF IRELAND SOME OF THE MAJOR ONES BEINGAT PRESSENT THEIR IS MAJOR DEFLATION INIRELAND WITH THE PRICES OF, EMPLOYMENT AND WAGES PROPERTY MOTOR CARSDUE TO HIGH SUPPLY AND EXTREMLY LOW DEMAND
  • 13. MESURING INFLATION• THE MOST WIDELY USED INDEX FOR MEASURING INFLATION IN IRELAND IS KNOWN AS THE CONSUMER PRICE INDEX..• THE CENTRAL STATISTICS OFFICE OF IRELAND IS RESPONSIBLE FOR MEASURING THE INFLATION RATES FOR EACH YEAR.• A TOTAL OF 807 ITEMS ARE COLLECTED WHICH ARE CLASSIFIED AS ESSENTIAL PRODUCTS AND SERVICES FOR THE AVERAGE IRISH HOUSEHOLD.
  • 14. EFFECTS OF INFLATIONINTERNATIONAL COMPETITIVNESSINFLATION IS A MAJOR FACTOR IN THE DETERMINATION OF A COUNTRIES COMPETITIVEPOSITON RELATING TO THE SPECIFIC COUNTRIES FIRMS ABILITY TO COMPETE FOR BUSINESSWITH ITS INTERNATIONAL COMPETITIORSDOLLARISAITONONCE INFLATION BECOMES ENTRENCHED THERE IS A DANGER THAT IT WILL TURN INCREASE INUNCONTROLLABLE RATES WHICH COULD RESULT IN HYPERINFLATION AS EXPERIENCE BYGERMANY FOR EXAMPLE AFTER WORLD WAR 2MENU AND SHOE LEATHER COSTSINFLATION CAUSES THE PRICE INCREASE OF PRODUCTS AND SERVICES OFFERED BY MACROFIRMS WHO ARE PRESSENTED WITH THE EXTRA EXPENSE OF RE-PRINTING NEW PRICE LISTSFOR CONSUMERS. EXAMPLE CAFÉ MENU’SEFFECTS ON INCOME DISTURBITONINFLATION CAN RESULT IN A MASSIVE REDISTRIBUTION OF INCOME BETWEEN DIFFERENTGROUPS IN SOCIETIES . FOR EXAMPLE A SAVER WHO LEAVES MONEY IN THE BANK FROM ANUMBER OF YEARS BACK FOR EXAMPLE 1970’S COULD RECEIVE A BANK INTEREST THAT ISLESS THAT THE RATE OF INFLATION THEREFORE PUNISHING THE SAVER FOR HIS OR HERCONSEVERTIVE ACTIONS.
  • 15. POPULATIONIS DEFINED AS A PARTICULAR SECTION, GROUP, OR TYPE OF PEOPLE OR ANIMALS LIVING INAN AREA OR COUNTRY.
  • 16. UNEPLOYMENTTHE BUREAU OF LABOR DEFIENS THE TERM UNEMPLOYMENT AS PEOPLE WHO DO NOTHAVE A JOB, HAVE ACTIVELY LOOKED FOR WORK IN THE PAST FOUR WEEKS, AND ARECURRENTLY AVAILABLE FOR WORKOCCURS WHEN PEOPLE ARE WITHOUT JOBS AND THEY HAVE ACTIVELY SOUGHT WORKWITHIN THE PAST FOUR WEEKSTHE MOST FREQUENTLY CITED MEASURE OF UNEMPLOYMENT IS THE UNEMPLOYMENTRATE. THIS IS THE NUMBER OF UNEMPLOYED PERSONS DIVIDED BY THE NUMBER OFPEOPLE IN THE LABOUR FORCE.UNEMPLOYMENT DOES NOT INCLUDE FULL-TIME STUDENTS, THE RETIRED, CHILDREN, ORTHOSE NOT ACTIVELY LOOKING FOR A PAYING JOB.TYPES OF UNEMPLOYMENT• Frictional Unemployment• Cyclical Unemployment
  • 17. PART BREPORT ON THE ECONOMY OF REPUBLIC OF IRELAND
  • 18. GDP Growth %: 2006 REPUBLIC OF IRELAND FRANCE GREECE UK 5.3% 2.5% 5.2% 2.8% GDP COMPOSITION BY SECTOR REPUBLIC OF IRELAND FRANCE GREECE UKAgriculture 1.30% 3.0% 3.3% 1% Industry 34.62% 4.9% 20.8% 25.6% Service 64.08% 92.1% 75.9% 73.4% http://monaco.angloinfo.com/countries/monaco/cia4.asp (accessed 10th November 2011) http://www.woodlands-junior.kent.sch.uk/customs/questions/economy.htm (Accessed 10th November 2011) http://www.allcountries.org/wfb2007/greece/greece_economy.html (Accessed 10th November 2011)
  • 19. GROSS DOMESTIC PRODUCE: 2006 FIGURE (REAL) DISPLAYED IN US DOLLARREPUBLIC OF IRELAND FRANCE GREECE UK $203.89 BILLION $2.25 TRILLION $304.86 BILLION $2.44 TRLLIONSourced: http://www.google.ie/publicdata (Accessed: 10th November 2011) GROSS DOMESTIC PRODUCE PER CAPITA: 2006 ( REAL) DISPLAYED IN US DOLLARREPUBLIC OF IRELAND FRANCE GREECE UK $52220 $35558 $23777 $40335 Sourced: http://www.google.ie/publicdata (Accessed: 10th November 2011)
  • 20. REPUBLIC OF IRELAND: 2006 - 2010 GROSS NAITONAL PRODUCT: (DISPLAYED IN US DOLLAR)(REAL) 175GROSS NATIONAL PRODUCT ( US DOLLAR 170 165 160 155 MILLIONS) 150 145 140 135 130 2006 2007 2008 2009 2010 Source: WWW.Google.com/publicdata {Accssed: 10/11/2010} YEAR 2006 2007 2008 2009 2010 156.23 169.62 164.18 147.01 145.72 Source: www.google.com/publicdata (ACCESSED 10th November 2011)
  • 21. REPUBLIC OF IRRELAND: 2006 - 2010 (REAL) GROSS DOMESTIC PRODUCE FIGURE $300.00 $250.00GDP SUM IN BILLIONS $200.00 $150.00 $100.00 $50.00 $0.00 2006 2007 2008 2009 2010 YEAR 2006 2007 2008 2009 2010 $222.47 $259.18 $263.65 $221.77 $203.89 Source: www.google.com/publicdata (ACCESSED 10th November 2011)
  • 22. REPUBLIC OF IRELAND: 2006 - 2010 GROSS DOMESTIC PRODUCE: GRWOTH IN % FORMAT 8.00% 6.00% 4.00%% GRWOTH OF GDP 2.00% 0.00% 2006 2007 2008 2009 2010 -2.00% -4.00% -6.00% -8.00% -10.00% YEAR 2006 2007 2008 2009 2010 5.30% 5.60% -3.50% -7.60% -1.00% Source: www.google.com/publicdata (ACCESSED 10th November 2011)
  • 23. Source:WWW.Google.com/publicdata REPUBLIC OF IRELAND: 2006 - 2010{Accssed: 10/11/2010} INFLATION RATE % 6.00% 4.00% 2.00%INFLATION RATE 0.00% 2006 2007 2008 2009 2010 -2.00% -4.00% -6.00% YEAR 2006 2007 2008 2009 2010 3.90% 4.90% 4.10% -4.50% -1.60% Source: www.google.com/publicdata (ACCESSED 10th November 2011)
  • 24. INFLATION RATE 2006 REPUBLIC OF FRANCE GREECE UK IRELAND 3.9% 1.5% 3.3% 3% Sourced: http://www.google.ie/publicdata (Accessed: 10th November 2011) TOTAL POPULATION 2006 ( Millions)REPUBLIC OF IRELAND FRANCE GREECE UK 4.26 63.53 M 11.14 M 60.59 M Sourced: http://www.google.ie/publicdata (Accessed: 10th November 2011)
  • 25. UNEMPLOYMENT % 2006REPUBLIC OF IRELAND FRANCE GREECE UK 9.2% 8.7% 9.2% 2.9%Sourced: http://www.google.ie/publicdata (Accessed: 10th November 2011) GNP (REAL)(Displayed in US Dollar) REPUBLIC OF IRELAND FRANCE GREECE UK $156.23 Billion $2.02 Trillion $295.58 Billion $ 2.13 TrillionSourced: http://www.google.ie/publicdata (Accessed: 10th November 2011)
  • 26. GNP PER CAPITA ( DISPLAYED IN US DOLLAR)REPUBLIC OF IRELAND FRANCE GREECE UK $36670 $31840 $26510 $35150Sourced: http://www.google.ie/publicdata (Accessed: 10th November 2011)
  • 27. REPUBLIC OF IRELAND: 2006 - 2010 UNPLOYMENT % RATE 14.00%PERCENTAGE RATE UNEMPLOYED 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 YEAR Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 4.30% 4.40% 4.80% 9.40% 13.00% Source: www.google.com/publicdata (ACCESSED 10th November 2011)
  • 28. REPUBLIC OF IRELAND: 2006 - 2010 REAL GDP PER CAPITA (DISPLAYED IN US DOLLAR) ( REAL) $70,000 $60,000GROSS DOMESTIC PRODUCE PER CAPITA $50,000 $40,000 $30,000 $20,000 $10,000 $0 2006 2007 2008 2009 2010Source: WWW.Google.com/publicdata {Accssed: 10/11/2010} YEAR 2006 2007 2008 2009 2010 $52,220 $59,548 $59,573 $49,738 $45,497 Source: www.google.com/publicdata (ACCESSED 10th November 2011)
  • 29. REPUBLIC OF IRELAND: 2006 - 2010 CONSUMER SPENDING % CHANGE 10.00% 5.00% 0.00%CONSUMER SPENDING % 2006 2007 2008 2009 2010 -5.00% -10.00% -15.00% -20.00% YEAR 2006 2007 2008 2009 2010 8.10% 7.30% -4.50% -18.00% -2.00% Source: www.google.com/publicdata (ACCESSED 10th November 2011)
  • 30. REPUBLIC OF IRELAN: 2006 - 2010 POPULATION GRAPH 4.5 4.45 4.4POPULATION FIGURE (MILLIONS) 4.35 4.3 4.25 4.2 4.15 2006 2007 2008 2009 2010 YEAR 2006 2007 2008 2009 2010 4.26 M 4.35 M 4.43 M 4.46 M 4.48 M Source: www.google.com/publicdata (ACCESSED 10th November 2011)
  • 31. REPUBLIC OF IRELAND: 2006 - 2010 POULATION % GRWOTH 3.00% 2.50%PERCENTAGE GROWTH 2.00% 1.50% 1.00% 0.50% 0.00% 2006 2007 2008 2009 2010 YEAR 2006 2007 2008 2009 2010 2.40% 2.20% 1.60% 0.70% 0.50% Source: www.google.com/publicdata (ACCESSED 10th November 2011)
  • 32. REPUBLIC OF IRELAND: 2006 - 2010 % UNEPLOYMENT YOUTH: 25 YEARS AND UNDER 30.00% 25.00% 20.00%% OF UNEMPLOYMENT 15.00% 10.00% 5.00% 0.00% Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 YEAR Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 8.90% 8.70% 9.90% 19.40% 27.00% Source: www.google.com/publicdata (ACCESSED 10th November 2011)
  • 33. Source:WWW.Google.com/publicdata REPUBLIC OF IRELAND: 2006 - 2010{Accssed: 10/11/2010} INFLATION RATE % 6.00% 4.00% 2.00%INFLATION RATE 0.00% 2006 2007 2008 2009 2010 -2.00% -4.00% -6.00% YEAR 2006 2007 2008 2009 2010 3.90% 4.90% 4.10% -4.50% -1.60% Source: www.google.com/publicdata (ACCESSED 10th November 2011)
  • 34. Source: REPUBLIC OF IRELAND: 2006 - 2010 WWW.Google.com/publicdata {Accssed: 10/11/2010} EXPORTS AS A % OF GDP 92.00% 90.00% 88.00% 86.00% 84.00%Axis Title 82.00% 80.00% 78.00% 76.00% 74.00% 72.00% 2006 2007 2008 2009 2006 2007 2008 2009 79.30% 83.50% 83.40% 90.70% Source: www.google.com/publicdata (ACCESSED 10th November 2011)