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Macroeconomics Lecture 3 Key Concepts

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Gale Pooley
Gale Pooley

Macro 3

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Lecture 3 Macroeconomics
Yabut Depends Compared to What?
Ideas IntellectualHumanPhysical Financial Inventions Culture Entrepreneurs The Eight Capitals of Innovation
Production
Innovation
Continuous Innovation
Worldview Political Legal Economic
1978 China Changed Worldview Deng XiaopingMao Zedong 1976 Dies
GDP Gross Domestic Product The market value of all final goods and services produced in a country in a given time
GDP How much stuff a country makes
GDP per Capita GDP per Person Average GDP
MarketValue What something would sell for
MarketValue One Apple plus One Orange = Three Dollars
All Everything except... Stuff you don’t sell
Final Intermediate Final
Final Intermediate
Goods and Services
Goods Services
Produced New Stuff Does not include the sale of used goods
Within a Country
In a given period of time Year Y/Y Quarter Q/Q Annualized: Q x 4
Percentage Change new number - old number old number
ThisYear - LastYear LastYear ThisYear = 75 LastYear = 60 Percentage Change?
75 - 60 60 15 60 .25 or 25%
How do you calculate GDP?
GDP = C = Consumption I = Investment G = Government X = Exports M = Imports
GDP = C + I + G + (X - M)
Consumption Spending by households on goods and services, except new housing
Investment Spending on capital equipment, inventories, and structures, including new housing
Government Spending on goods and services from local, state, and federal governments.
Net Exports Exports minus imports
Net Exports Foreigners buying exports minus domestic residents buying foreign goods
What is GDP? C = 105 I = 40 G = 25 X = 30 M = 20
GDP = C + I + G + (X - M) = 105 + 40 + 25 +(30-20) = 105 + 40 + 25 +10 = 180
GDP GDP per Capita
GDP $75 trillion Population 7.5 billion GDP Per Capita $10,000
GDP $18.5 trillion Population 323 million GDP Per Capita $57,275 United States Per Day $157
GDP $11 trillion Population 1.4 billion GDP Per Capita $7,857 Per Day $21 China
activated their entrepreneurs
https://fred.stlouisfed.org Public Data Explorer
Review GDP GDP per Capita Innovation
10 Questions 1. What is GDP? 2. What is GDP per Capita? 3. What is the Average GDP per capita on earth? 4. What is the GDP per capita in your country? 5. What is innovation? 6. Are all inventors also entrepreneurs? 7. What are the six capitals of innovation? 8. What is the source of wealth? 9. What is the Magic Machine of economics? 10. Will a hurricane increase GDP?

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