The document discusses various methods for calculating GDP, including the expenditure, income, and production approaches. It also discusses nominal and real GDP, as well as the GDP deflator. Additionally, it covers related topics such as national income, personal income, the business cycle, unemployment, inflation, and factors that can affect price levels.
The document defines key macroeconomic concepts such as aggregate demand, aggregate supply, and their components. It discusses how equilibrium output is determined by the intersection of the aggregate demand and aggregate supply curves. The saving-investment approach to determining equilibrium is also covered, where equilibrium occurs at the point where planned saving equals planned investment. Factors that can cause excess demand and deficient demand are explained, along with their impacts and appropriate policy responses.
Macroecos - Definition, scope, trade cycles, national income conceptsPrabha Panth
Macroeconomics studies an economy in the aggregate by looking at key indicators like GDP, inflation, employment, and growth. It examines how the whole economic system is impacted by interactions between households, firms, the government, and trade. The government uses fiscal and monetary policy tools to address issues and promote growth. The economy experiences regular boom-bust cycles, and macroeconomics aims to achieve stability and sustained increases in national income over the long run.
The document discusses national income accounting and macroeconomic aggregates. It defines GDP as the total market value of final goods and services produced domestically in a given period. GDP can be measured through the expenditure, income, and production approaches. Key components of GDP include personal consumption, private investment, government spending, and net exports. The circular flow diagram models the flows of money between households and firms.
This document provides an introduction to macroeconomics and national income accounting. It defines key macroeconomic variables like aggregate demand, aggregate supply, and discusses how the economy is measured. National income is measured using three approaches: production, income, and expenditure. Real GDP is adjusted for inflation using a price index to measure economic growth. National income deducts capital consumption to estimate sustainable income levels.
The document discusses key economic goals and indicators used to measure economic performance, including low inflation, low unemployment, a healthy balance of payments, and high economic growth. It defines inflation, unemployment, balance of payments, and economic growth. For each concept, it provides the measurement used (e.g. Consumer Price Index for inflation, unemployment rate for unemployment) and a brief explanation of the measurement. It also discusses GDP and the three approaches used to calculate it - output, expenditure, and income.
These points are taken from Macroeconomics Theory and Practice of HL Ahuja. The textbook is recommended for level course in Macro Economics offered to BS(BA) students in CIIT Attock.
This document discusses macroeconomic indicators and how to use them. It defines key indicators such as GDP, inflation rates, interest rates, and price indices. GDP is a measure of total production and is calculated using expenditure, production, and income methods. Inflation is defined as the growth rate of price levels and is measured using price indices like the CPI. Interest rates are important in financial markets and the relationship between nominal rates and real rates (adjusted for inflation) is explained.
The document defines key macroeconomic concepts such as aggregate demand, aggregate supply, and their components. It discusses how equilibrium output is determined by the intersection of the aggregate demand and aggregate supply curves. The saving-investment approach to determining equilibrium is also covered, where equilibrium occurs at the point where planned saving equals planned investment. Factors that can cause excess demand and deficient demand are explained, along with their impacts and appropriate policy responses.
Macroecos - Definition, scope, trade cycles, national income conceptsPrabha Panth
Macroeconomics studies an economy in the aggregate by looking at key indicators like GDP, inflation, employment, and growth. It examines how the whole economic system is impacted by interactions between households, firms, the government, and trade. The government uses fiscal and monetary policy tools to address issues and promote growth. The economy experiences regular boom-bust cycles, and macroeconomics aims to achieve stability and sustained increases in national income over the long run.
The document discusses national income accounting and macroeconomic aggregates. It defines GDP as the total market value of final goods and services produced domestically in a given period. GDP can be measured through the expenditure, income, and production approaches. Key components of GDP include personal consumption, private investment, government spending, and net exports. The circular flow diagram models the flows of money between households and firms.
This document provides an introduction to macroeconomics and national income accounting. It defines key macroeconomic variables like aggregate demand, aggregate supply, and discusses how the economy is measured. National income is measured using three approaches: production, income, and expenditure. Real GDP is adjusted for inflation using a price index to measure economic growth. National income deducts capital consumption to estimate sustainable income levels.
The document discusses key economic goals and indicators used to measure economic performance, including low inflation, low unemployment, a healthy balance of payments, and high economic growth. It defines inflation, unemployment, balance of payments, and economic growth. For each concept, it provides the measurement used (e.g. Consumer Price Index for inflation, unemployment rate for unemployment) and a brief explanation of the measurement. It also discusses GDP and the three approaches used to calculate it - output, expenditure, and income.
These points are taken from Macroeconomics Theory and Practice of HL Ahuja. The textbook is recommended for level course in Macro Economics offered to BS(BA) students in CIIT Attock.
This document discusses macroeconomic indicators and how to use them. It defines key indicators such as GDP, inflation rates, interest rates, and price indices. GDP is a measure of total production and is calculated using expenditure, production, and income methods. Inflation is defined as the growth rate of price levels and is measured using price indices like the CPI. Interest rates are important in financial markets and the relationship between nominal rates and real rates (adjusted for inflation) is explained.
Introduction to Macroeconomics: National IncomeUpananda Witta
This document provides an overview of macroeconomics concepts across several chapters. It defines macroeconomics as dealing with aggregate economic metrics rather than individual parts. Key concepts discussed include the circular flow of income and goods between households, firms, and the government. The document also examines gross domestic product, national income, consumption, investment, fiscal and monetary policy, and how international trade impacts a country's national income. Multiple diagrams and equations are presented to illustrate macroeconomic relationships between sectors.
This document discusses macroeconomic equilibrium. It defines macroeconomic equilibrium as being determined by aggregate demand and aggregate supply. Equilibrium occurs when aggregate demand equals aggregate supply (AD=AS) and income equals expenditure (Y=E). The document provides details on the components of aggregate demand (consumption, investment, government spending, exports) and aggregate supply (consumption, savings, taxes, imports). It also discusses concepts like the consumption function, marginal propensity to consume, and how equilibrium can be shown using schedules, equations, and graphs.
National Income Accounting - Book VersionMark Anthony
This document discusses measuring GDP using the expenditure and income approaches. It defines GDP as the total market value of final goods and services produced within a country in a given period. The four main categories of expenditure are personal consumption, gross private investment, government spending, and net exports. Using the income approach, GDP is measured as the sum of compensation of employees, business profits, interest, and other income. The document also discusses real GDP, inflation, and limitations of GDP as a welfare measure.
Firms must consider the macroeconomic environment when making production and pricing decisions. Key indicators of an economy's performance include aggregate output, price levels, investment, consumption, and balance of payments. The macro economy represents the aggregation of individual households and firms. Common measures used to evaluate price movements are the consumer price index, wholesale price index, and GDP deflator.
Microeconomics i: Basic concepts in EconomicsUpananda Witta
This document provides an overview of key economic concepts covered in introductory economics including:
- Definitions of economic and non-economic goods and the production process. The four factors of production: land, labor, capital, and entrepreneurship.
- The concept of scarcity and how it leads to trade-offs requiring rational choice between alternative uses of limited resources. Opportunity cost is explored through examples.
- Demand analysis including the difference between demand and effective demand. The law of demand and factors that influence demand like price, income, tastes.
- Supply analysis including the law of supply and factors that influence supply like price, costs of production, and technology.
- Equilibrium concepts where
The document provides notes on key concepts in economics including national income accounting, GDP, inflation, the business cycle, economic growth, unemployment, and productivity. It defines GDP as the total value of goods and services produced within a country's borders in a year. GDP can be calculated using expenditure or income approaches. Nominal GDP is unadjusted for inflation while real GDP adjusts for inflation. [END SUMMARY]
Key concepts
• Measuring economic activity – GDP and GNP/GNI
• Output, income and expenditure methods of GDP accounting
• From GDP to GNP
• Nominal and real GDP
• Nominal and real GNP/GNI
• Per capita income
• Use of national income figures
• Green GDP
GDP, Inflation and unemployment for assessing Economic Health.MaherMubeen
Why do economists focus on GDP, Inflation, and unemployment for assessing the entire health of the economy? To know how much the countries are economically strong.
National income can be measured using three methods - the product or output method, the income method, and the expenditure method. The product method adds up the total value of goods and services produced domestically. The income method sums the incomes received by the factors of production. The expenditure method equals total consumption + investment + government spending + net exports in an economy. National income data is useful for economic planning and policymaking but has some limitations like neglecting non-monetary activities.
The document discusses several key macroeconomic indicators used to measure and understand a country's economy. It begins by explaining GDP as the total market value of all final goods and services produced within a country in a given period of time. It then discusses how GDP is calculated using the expenditure, income, and value added approaches. The document also covers other indicators like GNP, inflation rates, unemployment rates, and underemployment rates. It explains how to interpret and compare these figures across countries.
The document provides an overview of key macroeconomic concepts including:
1. The circular flow model showing flows between households and firms, including real flows (goods/services) and monetary flows (income, spending).
2. The five main macroeconomic goals and measuring the value of an economy using Gross Domestic Product (GDP).
3. Key injections to and withdrawals from the circular flow model, and how a shift in these factors can affect growth. For example, increased exports (an injection) could boost another sector.
Real GDP per capita is used to track economic growth over time. It measures the total value of goods and services produced adjusted for inflation, divided by population. Long-run growth depends on rising productivity - increased output per worker. There are three reasons for higher productivity: more physical capital available to workers, greater human capital through education, and advances in technology that allow workers to produce more with the same resources. Together, these factors determine differences in economic growth rates between countries.
I do not have enough information to determine the category of military expenditure or present two situations where GDP=GDE based on the given document. The document provides an overview of macroeconomics concepts like GDP, GNP, national income accounting, business cycles, inflationary and recessionary gaps, but it does not specify details about military expenditure categories or conditions for GDP=GDE.
This document provides an overview of key macroeconomic concepts including national income, gross domestic product, aggregate demand, aggregate consumption, gross domestic savings, and gross domestic capital formation. It discusses how these concepts are defined and measured. For example, it states that gross domestic capital formation is the addition to the capital stock within a country during a year through investments in infrastructure, machinery and other assets. It also summarizes the consumption function developed by John Maynard Keynes which models consumption as a linear function of disposable income.
1) Macroeconomics concepts include GDP components like consumption (C), investment (I), government spending (G), and net exports (X-M) that determine the business cycle of expansion and recession.
2) The macroeconomic goals of governments are growth, income distribution, employment, external stability, and price stability. Inflation and deflation impact prices, while unemployment types include cyclical and underemployment.
3) Fiscal policy tools like direct and indirect taxation, and government spending, influence aggregate demand and the macroeconomy. Cost-push and demand-pull factors can cause inflation by shifting the aggregate supply or demand curves.
This document defines GDP and its components. GDP is equal to the total expenditures for all final goods and services produced within a country in a year. It is also equal to the sum of value added at each production stage by all industries, plus taxes and minus subsidies. GDP is calculated using the expenditure method as the sum of consumption, investment, government spending, and net exports. The components of GDP - consumption, investment, government spending, exports and imports - are also defined.
The document discusses key macroeconomic concepts including aggregate demand, aggregate supply, the consumption function, investment function, and the multiplier. It provides the following key points:
- Aggregate demand is the total demand for final goods and services in an economy. It is affected by factors like money, taxes, prices, and trade.
- Aggregate supply represents the maximum output an economy can produce at full employment. It can shift due to changes in inputs like labor, capital, technology and costs.
- The consumption function explains autonomous and induced consumption and how consumption relates to disposable income based on the marginal propensity to consume.
- The investment function depends on interest rates, profit expectations and taxes, and
Determination of income and employment important notesVijay Kumar
This document defines key macroeconomic concepts related to aggregate demand and supply. It explains that:
1. Aggregate demand is the total planned expenditure on final goods and services and equals consumption + investment + government spending + net exports. Consumption and investment make up aggregate demand in a simple two-sector economy.
2. Aggregate supply is the total planned output of final goods and services and equals national income. National income equals consumption + savings at the national level.
3. The consumption function shows the relationship between consumption and national income, where consumption has an autonomous and induced component. The marginal propensity to consume is the change in consumption from a change in income.
This document discusses macroeconomic concepts such as national product, GDP, GNP and their measurement. It provides information on:
1) The different methods of measuring national income - the output, expenditure and income methods. It also discusses the alternative measures of national output such as GNP, NNP, national income etc.
2) The relationship between GDP, GNP, NNP and NDP at market prices and factor costs.
3) The distinction between nominal and real GDP/GNP and the use of price deflators.
4) Other macroeconomic indicators like wholesale price index, consumer price index, index of industrial production, money and credit aggregates.
1. The document discusses measuring GDP and economic growth. It defines GDP and explains how the Bureau of Economic Analysis measures US GDP using the expenditure and income approaches.
2. Real GDP is discussed as a way to separate economic growth from inflation. It explains how real GDP is calculated using base year prices or chain-weighted indexes.
3. The limitations of using real GDP as a welfare measure are outlined, as it does not capture all aspects of economic well-being.
This document provides an overview of key economic concepts related to measuring total production, GDP, economic growth, inflation, unemployment, and the sources of short-run economic growth. It defines GDP as the market value of all final goods and services produced in a country in a year. The components of GDP are outlined as personal consumption, private investment, government spending, and net exports. Methods for measuring GDP, real GDP, inflation, and unemployment are also summarized. The sources of short-run economic growth are described as aggregate expenditure, the components of which are consumption, investment, government purchases, and net exports.
Introduction to Macroeconomics: National IncomeUpananda Witta
This document provides an overview of macroeconomics concepts across several chapters. It defines macroeconomics as dealing with aggregate economic metrics rather than individual parts. Key concepts discussed include the circular flow of income and goods between households, firms, and the government. The document also examines gross domestic product, national income, consumption, investment, fiscal and monetary policy, and how international trade impacts a country's national income. Multiple diagrams and equations are presented to illustrate macroeconomic relationships between sectors.
This document discusses macroeconomic equilibrium. It defines macroeconomic equilibrium as being determined by aggregate demand and aggregate supply. Equilibrium occurs when aggregate demand equals aggregate supply (AD=AS) and income equals expenditure (Y=E). The document provides details on the components of aggregate demand (consumption, investment, government spending, exports) and aggregate supply (consumption, savings, taxes, imports). It also discusses concepts like the consumption function, marginal propensity to consume, and how equilibrium can be shown using schedules, equations, and graphs.
National Income Accounting - Book VersionMark Anthony
This document discusses measuring GDP using the expenditure and income approaches. It defines GDP as the total market value of final goods and services produced within a country in a given period. The four main categories of expenditure are personal consumption, gross private investment, government spending, and net exports. Using the income approach, GDP is measured as the sum of compensation of employees, business profits, interest, and other income. The document also discusses real GDP, inflation, and limitations of GDP as a welfare measure.
Firms must consider the macroeconomic environment when making production and pricing decisions. Key indicators of an economy's performance include aggregate output, price levels, investment, consumption, and balance of payments. The macro economy represents the aggregation of individual households and firms. Common measures used to evaluate price movements are the consumer price index, wholesale price index, and GDP deflator.
Microeconomics i: Basic concepts in EconomicsUpananda Witta
This document provides an overview of key economic concepts covered in introductory economics including:
- Definitions of economic and non-economic goods and the production process. The four factors of production: land, labor, capital, and entrepreneurship.
- The concept of scarcity and how it leads to trade-offs requiring rational choice between alternative uses of limited resources. Opportunity cost is explored through examples.
- Demand analysis including the difference between demand and effective demand. The law of demand and factors that influence demand like price, income, tastes.
- Supply analysis including the law of supply and factors that influence supply like price, costs of production, and technology.
- Equilibrium concepts where
The document provides notes on key concepts in economics including national income accounting, GDP, inflation, the business cycle, economic growth, unemployment, and productivity. It defines GDP as the total value of goods and services produced within a country's borders in a year. GDP can be calculated using expenditure or income approaches. Nominal GDP is unadjusted for inflation while real GDP adjusts for inflation. [END SUMMARY]
Key concepts
• Measuring economic activity – GDP and GNP/GNI
• Output, income and expenditure methods of GDP accounting
• From GDP to GNP
• Nominal and real GDP
• Nominal and real GNP/GNI
• Per capita income
• Use of national income figures
• Green GDP
GDP, Inflation and unemployment for assessing Economic Health.MaherMubeen
Why do economists focus on GDP, Inflation, and unemployment for assessing the entire health of the economy? To know how much the countries are economically strong.
National income can be measured using three methods - the product or output method, the income method, and the expenditure method. The product method adds up the total value of goods and services produced domestically. The income method sums the incomes received by the factors of production. The expenditure method equals total consumption + investment + government spending + net exports in an economy. National income data is useful for economic planning and policymaking but has some limitations like neglecting non-monetary activities.
The document discusses several key macroeconomic indicators used to measure and understand a country's economy. It begins by explaining GDP as the total market value of all final goods and services produced within a country in a given period of time. It then discusses how GDP is calculated using the expenditure, income, and value added approaches. The document also covers other indicators like GNP, inflation rates, unemployment rates, and underemployment rates. It explains how to interpret and compare these figures across countries.
The document provides an overview of key macroeconomic concepts including:
1. The circular flow model showing flows between households and firms, including real flows (goods/services) and monetary flows (income, spending).
2. The five main macroeconomic goals and measuring the value of an economy using Gross Domestic Product (GDP).
3. Key injections to and withdrawals from the circular flow model, and how a shift in these factors can affect growth. For example, increased exports (an injection) could boost another sector.
Real GDP per capita is used to track economic growth over time. It measures the total value of goods and services produced adjusted for inflation, divided by population. Long-run growth depends on rising productivity - increased output per worker. There are three reasons for higher productivity: more physical capital available to workers, greater human capital through education, and advances in technology that allow workers to produce more with the same resources. Together, these factors determine differences in economic growth rates between countries.
I do not have enough information to determine the category of military expenditure or present two situations where GDP=GDE based on the given document. The document provides an overview of macroeconomics concepts like GDP, GNP, national income accounting, business cycles, inflationary and recessionary gaps, but it does not specify details about military expenditure categories or conditions for GDP=GDE.
This document provides an overview of key macroeconomic concepts including national income, gross domestic product, aggregate demand, aggregate consumption, gross domestic savings, and gross domestic capital formation. It discusses how these concepts are defined and measured. For example, it states that gross domestic capital formation is the addition to the capital stock within a country during a year through investments in infrastructure, machinery and other assets. It also summarizes the consumption function developed by John Maynard Keynes which models consumption as a linear function of disposable income.
1) Macroeconomics concepts include GDP components like consumption (C), investment (I), government spending (G), and net exports (X-M) that determine the business cycle of expansion and recession.
2) The macroeconomic goals of governments are growth, income distribution, employment, external stability, and price stability. Inflation and deflation impact prices, while unemployment types include cyclical and underemployment.
3) Fiscal policy tools like direct and indirect taxation, and government spending, influence aggregate demand and the macroeconomy. Cost-push and demand-pull factors can cause inflation by shifting the aggregate supply or demand curves.
This document defines GDP and its components. GDP is equal to the total expenditures for all final goods and services produced within a country in a year. It is also equal to the sum of value added at each production stage by all industries, plus taxes and minus subsidies. GDP is calculated using the expenditure method as the sum of consumption, investment, government spending, and net exports. The components of GDP - consumption, investment, government spending, exports and imports - are also defined.
The document discusses key macroeconomic concepts including aggregate demand, aggregate supply, the consumption function, investment function, and the multiplier. It provides the following key points:
- Aggregate demand is the total demand for final goods and services in an economy. It is affected by factors like money, taxes, prices, and trade.
- Aggregate supply represents the maximum output an economy can produce at full employment. It can shift due to changes in inputs like labor, capital, technology and costs.
- The consumption function explains autonomous and induced consumption and how consumption relates to disposable income based on the marginal propensity to consume.
- The investment function depends on interest rates, profit expectations and taxes, and
Determination of income and employment important notesVijay Kumar
This document defines key macroeconomic concepts related to aggregate demand and supply. It explains that:
1. Aggregate demand is the total planned expenditure on final goods and services and equals consumption + investment + government spending + net exports. Consumption and investment make up aggregate demand in a simple two-sector economy.
2. Aggregate supply is the total planned output of final goods and services and equals national income. National income equals consumption + savings at the national level.
3. The consumption function shows the relationship between consumption and national income, where consumption has an autonomous and induced component. The marginal propensity to consume is the change in consumption from a change in income.
This document discusses macroeconomic concepts such as national product, GDP, GNP and their measurement. It provides information on:
1) The different methods of measuring national income - the output, expenditure and income methods. It also discusses the alternative measures of national output such as GNP, NNP, national income etc.
2) The relationship between GDP, GNP, NNP and NDP at market prices and factor costs.
3) The distinction between nominal and real GDP/GNP and the use of price deflators.
4) Other macroeconomic indicators like wholesale price index, consumer price index, index of industrial production, money and credit aggregates.
1. The document discusses measuring GDP and economic growth. It defines GDP and explains how the Bureau of Economic Analysis measures US GDP using the expenditure and income approaches.
2. Real GDP is discussed as a way to separate economic growth from inflation. It explains how real GDP is calculated using base year prices or chain-weighted indexes.
3. The limitations of using real GDP as a welfare measure are outlined, as it does not capture all aspects of economic well-being.
This document provides an overview of key economic concepts related to measuring total production, GDP, economic growth, inflation, unemployment, and the sources of short-run economic growth. It defines GDP as the market value of all final goods and services produced in a country in a year. The components of GDP are outlined as personal consumption, private investment, government spending, and net exports. Methods for measuring GDP, real GDP, inflation, and unemployment are also summarized. The sources of short-run economic growth are described as aggregate expenditure, the components of which are consumption, investment, government purchases, and net exports.
This document provides an overview of a pilot study examining the impact of Gross Domestic Product (GDP) on economic development. It includes an abstract, introduction describing the background and problem statement, and outlines the research methodology. The body of the document then defines GDP and how it is calculated, discussing key concepts like stocks and flows. It also examines how GDP is measured using the expenditure and income approaches, and how this relates to the circular flow of income and expenditure in an economy.
In these slides we discuss about Economic Growth & Business Cycle like GDP, Real GDP, Ways of measuring GDP, GNP, Aggregate Demand and Supply, Stages and Shape of Business Cycle, Growth / Expansion, Peak / Boom, Recession, Depression
Impact of Gross Domestic Product (GDP) on Economic Development of A CountryMuhammad Asif Khan
This document provides an overview of a pilot study examining the impact of Gross Domestic Product (GDP) on economic development. It includes an abstract, introduction, research methodology, and definitions of key terms like GDP, stocks and flows. The study aims to determine if GDP is the only indicator to measure economic well-being and development, or if other factors should also be considered. It uses a literature review methodology to explore this question and define hypotheses.
This document provides definitions and diagrams related to macroeconomics concepts including:
- Definitions of macroeconomics, national income, GDP, GNP, real GDP
- Circular flow diagrams showing flows between households, firms, government
- Components of aggregate demand and supply
- Causes of shifts in aggregate demand and short-run aggregate supply
- Business cycles and use of diagrams to illustrate macroeconomic goals
- Unemployment, inflation, and Phillips curve concepts
- Monetary and fiscal policy approaches and their strengths/weaknesses
This document provides definitions and diagrams related to macroeconomics concepts including:
- Definitions of macroeconomics, national income, GDP, GNP, real GDP
- Circular flow diagrams showing flows between households, firms, government
- Components of aggregate demand and supply
- Causes of shifts in aggregate demand and short-run aggregate supply
- Business cycles and use of diagrams to illustrate macroeconomic goals
- Unemployment, inflation, and Phillips curve concepts
- Monetary and fiscal policy approaches and their strengths/weaknesses
National income is a measure of the total value of goods and services produced in an economy over a period of time, usually one year. It can be measured as the total income earned from production or the total spending on production. There are several definitions of national income but they generally refer to it as the total output or income of a nation. National income is commonly measured using Gross Domestic Product (GDP), Gross National Product (GNP), Net Domestic Product (NDP), and Per Capita Income (PCI). It is calculated using the Product Method, Income Method, and Expenditure Method by considering factors like consumption, investment, government spending, and trade flows.
Aggregate demand refers to the total demand for final goods and services in an economy. It has four main components: private consumption expenditure, investment expenditure by private firms, government expenditure, and net exports. Aggregate supply refers to the total supply of final goods and services that producers are willing to supply in an economy. It is equal to national income, which is the sum of factor incomes such as wages, rent, interest, and profits.
Economic growth occurs when real GDP increases faster than the population, improving the overall standard of living. Macroeconomic equilibrium exists when aggregate supply equals aggregate demand. The key sources of economic growth are the factors of production (natural resources, labor, capital, entrepreneurship) as well as productivity gains from education and training of workers, increases in capital investment, improvements in management, and research and development leading to new equipment and products.
This document discusses the key factors that cause economic growth. It defines aggregate supply and aggregate demand, explaining that macroeconomic equilibrium occurs when aggregate supply equals aggregate demand. The document also identifies four main sources of economic growth: factors of production (natural resources, labor, capital, entrepreneurship), productivity gains (from education, capital investment, management, and research & development), and how productivity gains lead to economic growth through new capital investment and improved equipment. Real economic growth is measured by increases in GDP per capita, which is a better measure of improved standard of living than GDP alone.
This document discusses the key factors that cause economic growth. It defines aggregate supply and aggregate demand, explaining that macroeconomic equilibrium occurs when aggregate supply equals aggregate demand. The document also identifies four main sources of economic growth: factors of production (natural resources, labor, capital, entrepreneurship), productivity gains (from education, capital investment, management, and research & development), and how productivity gains lead to economic growth through new capital investment and improved equipment. Real economic growth is measured by increases in GDP per capita, which is a better measure of improved standard of living than GDP alone.
This document discusses the key factors that cause economic growth. It defines aggregate supply and aggregate demand, explaining that macroeconomic equilibrium occurs when aggregate supply equals aggregate demand. The document also identifies four main sources of economic growth: factors of production (natural resources, labor, capital, entrepreneurship), productivity gains (from education, capital investment, management, and research & development), and how productivity gains lead to economic growth through new capital investment and improved equipment. Real economic growth is measured by increases in GDP per capita, which is a better measure of improved standard of living than GDP alone.
national income ,GNP, GDP, NOMINAL AND REAL INTEREST RATES& PPP'SVineeth Poliyath
National income refers to the total money value of all final goods and services produced within a country in a given year. It is used to measure the overall economic activity and standard of living in a country. GDP is a key measure of national income and is defined as the total market value of all final goods and services produced within a country in a given period of time. GDP can be calculated using the expenditure approach, income approach, or output approach and includes consumption, investment, government spending, and net exports. While GDP is a useful measure, it does not account for all factors that affect economic well-being such as leisure, environmental quality, and non-market activities.
GDP is used to measure economic growth and compare economic well-being over time and across countries. Real GDP measures the value of final goods and services produced adjusted for inflation. It is calculated using the chained-weighted output index method, which values one year's output using the previous year's prices and the current year's prices. While real GDP provides useful information, it does not perfectly measure economic welfare due to factors like quality improvements, household production, and environmental costs that are excluded from its calculation.
The document provides definitions and explanations of key concepts related to the UK economy, including:
1) Real GDP, which measures total output adjusted for inflation. Growth in real GDP and inflation are also discussed.
2) Unemployment, which refers to those able and willing to work but unable to find jobs.
3) The balance of payments, which records trade in imports and exports.
4) Short run and long run economic growth and factors that influence growth potential.
Macroeconomics examines aggregate economic measures for entire economies, such as total output, income, spending, employment and prices. It analyzes topics like economic growth, inflation, recession and the effects of fiscal and monetary policy. Microeconomics looks at individual agents and markets. Macroeconomics deals with economy-wide phenomena and seeks to understand how the whole economic system functions.
The document discusses several topics related to economic growth including:
1. Factors that affect economic growth such as physical capital, human capital, and technological advancement.
2. Preconditions for growth including incentive systems, markets, property rights, and monetary exchange.
3. Sources of faster growth including saving and investment in new capital, investment in human capital, and new technologies.
4. Theories of economic growth such as classical, neoclassical, and new growth theories.
L2 flash cards portfolio management - SS 18analystbuddy
Mean-variance analysis is used to identify optimal portfolios based on expected returns, variances, and covariances of asset returns. The minimum-variance frontier shows the efficient combinations of expected return and risk. The efficient frontier begins with the global minimum-variance portfolio and provides the maximum expected return for a given level of variance. The capital market line describes combinations of the risk-free asset and market portfolio. The capital asset pricing model expresses expected returns as a linear function of systematic risk measured by beta.
The document discusses various financial derivatives including synthetic instruments, options, interest rate derivatives, currency and equity swaps, credit default swaps, and credit derivative trading strategies. It provides formulas for pricing these instruments and outlines how their values are affected by various risk factors.
The value of a forward contract at initiation is zero. Over time, the value depends on the relationship between the forward price and the expected future spot price. Futures prices also converge to the spot price at expiration. Like forwards, futures have value of zero at initiation but are marked to market daily. Factors like storage costs, convenience yields, and interest rates can cause the futures price to be in contango or backwardation relative to the expected future spot price.
The document discusses various types of risks associated with bonds, including default risk, credit spread risk, and downgrade risk. It then provides information on analyzing bonds and issuers, including sources of default risk information, the four Cs of credit analysis (character, covenants, collateral, capacity), factors for evaluating capacity and financial position, using ratios in credit analysis, and cash flow and leverage ratios used by ratings agencies. The document also discusses analyzing specific types of bonds and issuers.
The document discusses various types of risks associated with bonds, including default risk, credit spread risk, and downgrade risk. It then provides information on analyzing bonds and issuers, including sources of default risk information, the four Cs of credit analysis (character, covenants, collateral, capacity), factors for evaluating capacity and financial position, using ratios in credit analysis, and cash flow and leverage ratios used by ratings agencies. The document also discusses analyzing specific types of bonds and issuers.
L2 flash cards alternative investments - SS 13analystbuddy
The document discusses six main types of real estate investments: 1) Raw land, 2) Residential rentals (apartments), 3) Office buildings, 4) Warehouses, 5) Community shopping centers, and 6) Hotels and motels. For each type, it outlines the main value determinants, investment characteristics, principal risks, and most likely investors. It also provides guidance on testing real estate investments, focusing on understanding the logic rather than memorizing details. Real estate valuation approaches include income approach, cost approach, and sales comparison approach.
The document discusses various methods for valuing companies and estimating required returns. It covers sum-of-the-parts valuation, conglomerate discounts, characteristics of good valuation models, different return concepts such as holding period return and required returns, methods to estimate required returns including CAPM and multifactor models, and discount rates. It also discusses Porter's five forces framework and factors that influence industry competition and profitability.
L2 flash cards corporate finance - SS 8analystbuddy
The document discusses various concepts related to capital budgeting and corporate finance. It provides formulas for calculating the investment needed for expansion and replacement projects. It also discusses factors that affect a firm's capital structure, dividend policy, and methods of valuation. Key terms defined include economic profit, residual income, and real options. The document is a study guide that references various readings related to capital budgeting, capital structure, and corporate governance.
L2 flash cards financial reporting - SS 7analystbuddy
The document discusses various definitions of earnings metrics like EBITDA, operating income, and net income. It also discusses the reliability of cash flow trends compared to earnings trends, noting that sustainable earnings growth requires growth in operating cash flows over the long run. Finally, it discusses accounting treatments for different types of hedges, as well as cash versus accrual basis accounting and how management can intervene in the external financial reporting process.
L2 flash cards financial reporting - SS 6analystbuddy
The document discusses various topics related to accounting for inter-corporate investments and post-employment benefits under IFRS. It covers classification of investments, effects of different accounting methods, components of pension obligations and expenses, assumptions used in valuations, and impact on financial statements. Translation of foreign subsidiary financial statements using current and temporal methods is also summarized, along with effects of translation on parent company ratios and treatment of hyperinflationary economies.
L2 flash cards financial reporting - SS 5analystbuddy
The document discusses various inventory costing methods and their effects on financial ratios. It also covers LIFO reserves, converting financial statements between LIFO and FIFO, implications of using net realizable value for inventory valuation, and differences in financial reporting between companies using LIFO versus FIFO. Additional topics covered include capitalization versus expensing costs, various depreciation methods, impairment and revaluation of assets, leasing versus purchasing assets, and classifications of finance versus operating leases.
The document provides information on various statistical and econometric concepts related to correlation, regression, and time series analysis. It defines key terms like scatter plots, correlation coefficients, covariance, standard deviation, outliers, hypothesis testing, dependent and independent variables, assumptions of linear regression, F-tests, R-squared, dummy variables, heteroskedasticity, serial correlation, and trend models. It also provides the formulas and explanations for calculating these various concepts.
The document discusses several topics related to international finance including exchange rates, currency markets, balance of payments, and current and capital accounts. It defines key terms like spot rates, forward rates, currency strength, and covered interest arbitrage. It also summarizes the components of the balance of payments account including the current, capital, and official reserve accounts. Current account deficits are typically offset by financial account surpluses as foreign capital flows finance trade deficits.
The document discusses general fiduciary standards and the prudent man rule vs the prudent investor rule for trustees. It provides 3 key points:
1) Trustees have a duty of care, skill, caution, loyalty and impartiality. This includes seeking advice if lacking relevant investment knowledge.
2) The prudent man rule focuses on diversification to reduce risk, while the prudent investor rule emphasizes investing in the best interest of beneficiaries.
3) When investing and managing trust assets, trustees must consider economic conditions, inflation, tax impacts, risk/return of individual investments and the portfolio overall, and the needs of beneficiaries.
The document discusses the CFA Institute's Professional Conduct Program which establishes rules of conduct for CFA members and candidates through a Code of Ethics and Standards of Professional Conduct. The CFA Institute enforces these rules through a Professional Conduct Program that investigates potential violations and issues disciplinary sanctions if needed. The Code outlines six principles of ethical conduct while the Standards describe rules in more detail across seven areas including professionalism, duties to clients and employers, and conflicts of interest. Adherence to these rules is meant to maintain the integrity of the investment profession.
L1 flash cards alternative investments (ss18)analystbuddy
The document discusses various types of investment funds including open-end funds, closed-end funds, exchange traded funds (ETFs), real estate investment funds, private equity funds, hedge funds, and fund of funds. It provides details on key characteristics such as legal structure, fees, investment strategies, risks, and performance measurement challenges for each type of fund. The document also covers topics such as net asset value calculation, types of fees for mutual funds, real estate valuation approaches, stages of private equity investments, and challenges of investing in venture capital.
There are two main types of derivatives - exchange-traded and over-the-counter. Exchange-traded derivatives are traded on a centralized exchange, have standard terms, involve a clearing house and have low default risk. Over-the-counter derivatives are privately negotiated between two parties, have no central exchange and higher counterparty risk. Common derivatives include forwards, futures, options, and swaps. Forwards and futures are agreements to buy/sell an asset at a future date, while options provide the right but not obligation to do so. Swaps involve exchanging payments over time based on an underlying asset.
The document discusses portfolio management concepts including diversification, types of investors, the portfolio management process, developing an investment policy statement, mutual funds, and measures of investment returns. It provides definitions and formulas for key concepts such as holding period return, money weighted return, annualizing returns, portfolio return, variance, standard deviation, beta, the capital asset pricing model, and the Sharpe ratio.
The document discusses key aspects of the capital budgeting process, including:
1) The main steps such as brainstorming ideas, analyzing cash flows, integrating projects, and post-auditing.
2) Types of capital projects like replacement, expansion, new products, and regulatory projects.
3) Methods for evaluating projects like NPV, IRR, payback period, and profitability index.
4) Estimating cash flows, costs of capital including WACC, and dealing with conflicts between methods.
So in summary, it provides an overview of the capital budgeting process, types of projects, evaluation methods, and considerations for costs and cash flows.
Must Know Postgres Extension for DBA and Developer during MigrationMydbops
Mydbops Opensource Database Meetup 16
Topic: Must-Know PostgreSQL Extensions for Developers and DBAs During Migration
Speaker: Deepak Mahto, Founder of DataCloudGaze Consulting
Date & Time: 8th June | 10 AM - 1 PM IST
Venue: Bangalore International Centre, Bangalore
Abstract: Discover how PostgreSQL extensions can be your secret weapon! This talk explores how key extensions enhance database capabilities and streamline the migration process for users moving from other relational databases like Oracle.
Key Takeaways:
* Learn about crucial extensions like oracle_fdw, pgtt, and pg_audit that ease migration complexities.
* Gain valuable strategies for implementing these extensions in PostgreSQL to achieve license freedom.
* Discover how these key extensions can empower both developers and DBAs during the migration process.
* Don't miss this chance to gain practical knowledge from an industry expert and stay updated on the latest open-source database trends.
Mydbops Managed Services specializes in taking the pain out of database management while optimizing performance. Since 2015, we have been providing top-notch support and assistance for the top three open-source databases: MySQL, MongoDB, and PostgreSQL.
Our team offers a wide range of services, including assistance, support, consulting, 24/7 operations, and expertise in all relevant technologies. We help organizations improve their database's performance, scalability, efficiency, and availability.
Contact us: info@mydbops.com
Visit: https://www.mydbops.com/
Follow us on LinkedIn: https://in.linkedin.com/company/mydbops
For more details and updates, please follow up the below links.
Meetup Page : https://www.meetup.com/mydbops-databa...
Twitter: https://twitter.com/mydbopsofficial
Blogs: https://www.mydbops.com/blog/
Facebook(Meta): https://www.facebook.com/mydbops/
AppSec PNW: Android and iOS Application Security with MobSFAjin Abraham
Mobile Security Framework - MobSF is a free and open source automated mobile application security testing environment designed to help security engineers, researchers, developers, and penetration testers to identify security vulnerabilities, malicious behaviours and privacy concerns in mobile applications using static and dynamic analysis. It supports all the popular mobile application binaries and source code formats built for Android and iOS devices. In addition to automated security assessment, it also offers an interactive testing environment to build and execute scenario based test/fuzz cases against the application.
This talk covers:
Using MobSF for static analysis of mobile applications.
Interactive dynamic security assessment of Android and iOS applications.
Solving Mobile app CTF challenges.
Reverse engineering and runtime analysis of Mobile malware.
How to shift left and integrate MobSF/mobsfscan SAST and DAST in your build pipeline.
What is an RPA CoE? Session 1 – CoE VisionDianaGray10
In the first session, we will review the organization's vision and how this has an impact on the COE Structure.
Topics covered:
• The role of a steering committee
• How do the organization’s priorities determine CoE Structure?
Speaker:
Chris Bolin, Senior Intelligent Automation Architect Anika Systems
zkStudyClub - LatticeFold: A Lattice-based Folding Scheme and its Application...Alex Pruden
Folding is a recent technique for building efficient recursive SNARKs. Several elegant folding protocols have been proposed, such as Nova, Supernova, Hypernova, Protostar, and others. However, all of them rely on an additively homomorphic commitment scheme based on discrete log, and are therefore not post-quantum secure. In this work we present LatticeFold, the first lattice-based folding protocol based on the Module SIS problem. This folding protocol naturally leads to an efficient recursive lattice-based SNARK and an efficient PCD scheme. LatticeFold supports folding low-degree relations, such as R1CS, as well as high-degree relations, such as CCS. The key challenge is to construct a secure folding protocol that works with the Ajtai commitment scheme. The difficulty, is ensuring that extracted witnesses are low norm through many rounds of folding. We present a novel technique using the sumcheck protocol to ensure that extracted witnesses are always low norm no matter how many rounds of folding are used. Our evaluation of the final proof system suggests that it is as performant as Hypernova, while providing post-quantum security.
Paper Link: https://eprint.iacr.org/2024/257
Taking AI to the Next Level in Manufacturing.pdfssuserfac0301
Read Taking AI to the Next Level in Manufacturing to gain insights on AI adoption in the manufacturing industry, such as:
1. How quickly AI is being implemented in manufacturing.
2. Which barriers stand in the way of AI adoption.
3. How data quality and governance form the backbone of AI.
4. Organizational processes and structures that may inhibit effective AI adoption.
6. Ideas and approaches to help build your organization's AI strategy.
"Frontline Battles with DDoS: Best practices and Lessons Learned", Igor IvaniukFwdays
At this talk we will discuss DDoS protection tools and best practices, discuss network architectures and what AWS has to offer. Also, we will look into one of the largest DDoS attacks on Ukrainian infrastructure that happened in February 2022. We'll see, what techniques helped to keep the web resources available for Ukrainians and how AWS improved DDoS protection for all customers based on Ukraine experience
Have you ever been confused by the myriad of choices offered by AWS for hosting a website or an API?
Lambda, Elastic Beanstalk, Lightsail, Amplify, S3 (and more!) can each host websites + APIs. But which one should we choose?
Which one is cheapest? Which one is fastest? Which one will scale to meet our needs?
Join me in this session as we dive into each AWS hosting service to determine which one is best for your scenario and explain why!
Main news related to the CCS TSI 2023 (2023/1695)Jakub Marek
An English 🇬🇧 translation of a presentation to the speech I gave about the main changes brought by CCS TSI 2023 at the biggest Czech conference on Communications and signalling systems on Railways, which was held in Clarion Hotel Olomouc from 7th to 9th November 2023 (konferenceszt.cz). Attended by around 500 participants and 200 on-line followers.
The original Czech 🇨🇿 version of the presentation can be found here: https://www.slideshare.net/slideshow/hlavni-novinky-souvisejici-s-ccs-tsi-2023-2023-1695/269688092 .
The videorecording (in Czech) from the presentation is available here: https://youtu.be/WzjJWm4IyPk?si=SImb06tuXGb30BEH .
The Department of Veteran Affairs (VA) invited Taylor Paschal, Knowledge & Information Management Consultant at Enterprise Knowledge, to speak at a Knowledge Management Lunch and Learn hosted on June 12, 2024. All Office of Administration staff were invited to attend and received professional development credit for participating in the voluntary event.
The objectives of the Lunch and Learn presentation were to:
- Review what KM ‘is’ and ‘isn’t’
- Understand the value of KM and the benefits of engaging
- Define and reflect on your “what’s in it for me?”
- Share actionable ways you can participate in Knowledge - - Capture & Transfer
"Choosing proper type of scaling", Olena SyrotaFwdays
Imagine an IoT processing system that is already quite mature and production-ready and for which client coverage is growing and scaling and performance aspects are life and death questions. The system has Redis, MongoDB, and stream processing based on ksqldb. In this talk, firstly, we will analyze scaling approaches and then select the proper ones for our system.
In the realm of cybersecurity, offensive security practices act as a critical shield. By simulating real-world attacks in a controlled environment, these techniques expose vulnerabilities before malicious actors can exploit them. This proactive approach allows manufacturers to identify and fix weaknesses, significantly enhancing system security.
This presentation delves into the development of a system designed to mimic Galileo's Open Service signal using software-defined radio (SDR) technology. We'll begin with a foundational overview of both Global Navigation Satellite Systems (GNSS) and the intricacies of digital signal processing.
The presentation culminates in a live demonstration. We'll showcase the manipulation of Galileo's Open Service pilot signal, simulating an attack on various software and hardware systems. This practical demonstration serves to highlight the potential consequences of unaddressed vulnerabilities, emphasizing the importance of offensive security practices in safeguarding critical infrastructure.
inQuba Webinar Mastering Customer Journey Management with Dr Graham HillLizaNolte
HERE IS YOUR WEBINAR CONTENT! 'Mastering Customer Journey Management with Dr. Graham Hill'. We hope you find the webinar recording both insightful and enjoyable.
In this webinar, we explored essential aspects of Customer Journey Management and personalization. Here’s a summary of the key insights and topics discussed:
Key Takeaways:
Understanding the Customer Journey: Dr. Hill emphasized the importance of mapping and understanding the complete customer journey to identify touchpoints and opportunities for improvement.
Personalization Strategies: We discussed how to leverage data and insights to create personalized experiences that resonate with customers.
Technology Integration: Insights were shared on how inQuba’s advanced technology can streamline customer interactions and drive operational efficiency.
Your One-Stop Shop for Python Success: Top 10 US Python Development Providersakankshawande
Simplify your search for a reliable Python development partner! This list presents the top 10 trusted US providers offering comprehensive Python development services, ensuring your project's success from conception to completion.
Dandelion Hashtable: beyond billion requests per second on a commodity serverAntonios Katsarakis
This slide deck presents DLHT, a concurrent in-memory hashtable. Despite efforts to optimize hashtables, that go as far as sacrificing core functionality, state-of-the-art designs still incur multiple memory accesses per request and block request processing in three cases. First, most hashtables block while waiting for data to be retrieved from memory. Second, open-addressing designs, which represent the current state-of-the-art, either cannot free index slots on deletes or must block all requests to do so. Third, index resizes block every request until all objects are copied to the new index. Defying folklore wisdom, DLHT forgoes open-addressing and adopts a fully-featured and memory-aware closed-addressing design based on bounded cache-line-chaining. This design offers lock-free index operations and deletes that free slots instantly, (2) completes most requests with a single memory access, (3) utilizes software prefetching to hide memory latencies, and (4) employs a novel non-blocking and parallel resizing. In a commodity server and a memory-resident workload, DLHT surpasses 1.6B requests per second and provides 3.5x (12x) the throughput of the state-of-the-art closed-addressing (open-addressing) resizable hashtable on Gets (Deletes).
Fueling AI with Great Data with Airbyte WebinarZilliz
This talk will focus on how to collect data from a variety of sources, leveraging this data for RAG and other GenAI use cases, and finally charting your course to productionalization.
5th LF Energy Power Grid Model Meet-up SlidesDanBrown980551
5th Power Grid Model Meet-up
It is with great pleasure that we extend to you an invitation to the 5th Power Grid Model Meet-up, scheduled for 6th June 2024. This event will adopt a hybrid format, allowing participants to join us either through an online Mircosoft Teams session or in person at TU/e located at Den Dolech 2, Eindhoven, Netherlands. The meet-up will be hosted by Eindhoven University of Technology (TU/e), a research university specializing in engineering science & technology.
Power Grid Model
The global energy transition is placing new and unprecedented demands on Distribution System Operators (DSOs). Alongside upgrades to grid capacity, processes such as digitization, capacity optimization, and congestion management are becoming vital for delivering reliable services.
Power Grid Model is an open source project from Linux Foundation Energy and provides a calculation engine that is increasingly essential for DSOs. It offers a standards-based foundation enabling real-time power systems analysis, simulations of electrical power grids, and sophisticated what-if analysis. In addition, it enables in-depth studies and analysis of the electrical power grid’s behavior and performance. This comprehensive model incorporates essential factors such as power generation capacity, electrical losses, voltage levels, power flows, and system stability.
Power Grid Model is currently being applied in a wide variety of use cases, including grid planning, expansion, reliability, and congestion studies. It can also help in analyzing the impact of renewable energy integration, assessing the effects of disturbances or faults, and developing strategies for grid control and optimization.
What to expect
For the upcoming meetup we are organizing, we have an exciting lineup of activities planned:
-Insightful presentations covering two practical applications of the Power Grid Model.
-An update on the latest advancements in Power Grid -Model technology during the first and second quarters of 2024.
-An interactive brainstorming session to discuss and propose new feature requests.
-An opportunity to connect with fellow Power Grid Model enthusiasts and users.
1. Gross Domestic Product (GDP)
Using the Expenditure Approach
The Expenditures Approach measures the market value of all
the goods and services produced in an economy in a given
time period.
GDP under the Expenditure Approach can be calculated as:
GDP=C+I+G+(X-M)
where: C= Consumption usually the biggest factor
I= business investment it includes equipment
G= government spending
X= exports
M= imports
Study Session 5, Reading 17
2. Gross Domestic Product (GDP)
Using the Income Approach
The Income Approach measures the aggregate income earned
by all households, companies and governments in an economy
during a period.
GDP under the Income Approach can be calculated as:
GDP = R + I + P + SA + W
Components of income include:
Wages, salaries, and supplementary labor income
Corporate profits
Interest and miscellaneous investment income
Study Session 5, Reading 17
3. Methods of Calculating GDP: Value-
of-Final-Output
Under the Value of Final Output, only the value of the last
product is considered.
As a result, the value of intermediate products is ignored.
It measures the value of final goods and services.
Study Session 5, Reading 17
4. Methods of Calculating GDP: Sum-
of-Value-Output
The Sum of Value Added approach finds the sum of value
addition during the production process.
Value addition also considers value added at the distribution
level.
Study Session 5, Reading 17
5. Nominal GDP
Nominal GDP measures the value of goods and services at
current price levels.
It is calculated as:
GDPt = Pt * Qt
where Pt is price in year t and Qt is quantity in year t
Study Session 5, Reading 17
6. Real GDP
Real GDP is adjusted for inflation/deflation.
Real GDP can be calculated as:
GDPt = Pb * Qt
where Pb is price in base year and Qt is the quantity in the
year t
Real GDP per Capita, is Real GDP divided by population. It can
be used as a measure of the standard of living in a particular
country.
Study Session 5, Reading 17
7. GDP Deflator
The GDP Deflator is used to calculate Real GDP, given Nominal
GDP.
GDP Deflator = (value of current year output at current year
prices/value of current year output at base year prices)* 100
The GDP Deflator measures the aggregate change in prices in
the economy.
Changes in the deflator are a good indicator of inflation in the
economy.
Study Session 5, Reading 17
8. National Income
National Income is the compensation paid to all factors of
production.
National Income comprises of:
Employee compensation
Interest received net of interest paid
Rental income
Royalties paid for the use of intellectual property and
extractable natural resources.
Study Session 5, Reading 17
9. Personal Income
Personal Income is a broad measure of household income.
It is a gauge for changes in the ability of consumers to spend.
Personal Income measures all income received by the
household sector (earned or unearned).
Personal Income= National Income- indirect business taxes -
corporate income taxes - undistributed corporate profits +
transfer payments
Study Session 5, Reading 17
10. Personal Disposable Income
Disposable Income is calculated as personal income less
personal taxes.
Disposable Income measures income remaining to spend or
save after personal taxes.
Disposable Income is the most relevant measure of household
spending and saving power.
Study Session 5, Reading 17
11. Saving and Investment
There is a positive relationship between saving and
investment.
The higher the savings rate, the more money is available for
investment spending.
Investment spending is undertaken to improve technology or
new equipment.
Study Session 5, Reading 17
12. Fiscal Balance
Fiscal Balance is a measure of Fiscal Policy. It measures
Government outflows and inflows.
It measures the extent to which government receipts differ
from government outlays.
If outlays exceed receipts, then the fiscal balance is negative.
If receipts exceed outlays, then the balance is positive.
For a negative fiscal balance, the government must borrow to
meet the shortfall.
Study Session 5, Reading 17
13. Trade Balance
Trade Balance is a measure of an economy’s transactions with
other economies.
The Trade Balance measures the difference between a
country's imports and its exports.
A country has a trade deficit if it imports more than it exports.
A trade surplus occurs when a country’s exports exceed its
imports.
Study Session 5, Reading 17
14. Aggregate Demand
Four Sources
Consumption
Investment
Government spending
Net exports
Study Session 5, Reading 17
15. Income/Saving and Liquidity
Preference/Money Supply Curves
The Income/Savings and Liquidity Preference Money Supply
Curve demonstrates the relationship between interest rates
and real output in the goods and services market and the
money market.
Each point on the curve represents a certain level of
equilibrium in the money market.
Study Session 5, Reading 17
16. Aggregate Demand Curve
The aggregate demand curve represents the total quantity of
all goods and services demanded by the economy at
different price levels.
The vertical axis represents the price level of all final goods
and services. The aggregate price level is measured by either
the GDP deflator or CPI.
The horizontal axis represents the real quantity of all goods
and services purchased as measured by the level of real GDP.
Study Session 5, Reading 17
18. Aggregate Supply Curve in the
Short and Long Run
The Aggregate Supply Curve illustrates the level of domestic
output.
In the short run, output can be changed but the prices remain
constant.
Strong demand results in higher profits for producers. As a
result, producers increase supply.
This leads to an upward sloping Aggregate Supply curve in the
long run.
Aggregate Supply can be measured as:
Y=F(K,L)
Study Session 5, Reading 17
20. Shifts in the Aggregate Demand
Curve
Study Session 5, Reading 17
21. Shifts in the Aggregate Demand
Curve
Study Session 5, Reading 17
Changes in the level of spending by households, companies,
government and foreigners will cause the Aggregate Demand
curve to shift.
An increase in aggregate demand at any price level will cause
the Aggregate Demand curve to shift to the right.
A decrease in aggregate demand at any price level will cause
the Aggregate Demand curve to shift to the left.
22. Shifts in the Aggregate Supply
Curve
Study Session 5, Reading 17
23. Shifts in the Aggregate Supply
Curve
Study Session 5, Reading 17
Changes in the factors affecting the cost of production will
shift the short run aggregate supply curve.
The SRAS curve will shift by the same magnitude as the LRAS.
That is, changes in the same underlying resources and
technology have the same effect on LRAS and SRAS.
24. Shifts in the Aggregate Supply
Curve
Study Session 5, Reading 17
25. Economic Growth
Sources
Labour supply
Human capital
Physical capital
Technology
Natural resources (renewable and non-renewable)
Study Session 5, Reading 17
26. Economic Growth
Measures
The Growth Accounting Equation measures the growth in
potential GDP. It is calculated as:
Growth in potential GDP = Growth in technology + WL(growth
in labour) + WC(growth in capital)
There is no observed data on potential GDP or total
productivity.
Labour Productivity = Real GDP/Aggregate Hours
Labour productivity is an important measure of the health of
an economy.
Study Session 5, Reading 17
27. Production Functions
The Production Function specifies the output of an economy
for all combinations of inputs.
A production function can be expressed as:
Q = f(X1,X2,X3,...,Xn)
where:
Q = quantity of output; X1,X2,X3,...,Xn = quantities of factor
inputs
Output per worker is a measure of labour productivity. It is
calculated as:
Y/L=AF(1,K/L)Y/L
Study Session 5, Reading 17
28. Input Growth and Total Factor
Productivity
Increases in the quantity of inputs lead to increases in
economic activity.
In addition to this, Total Factor Productivity also boosts
economic activity.
Labour productivity depends on both TFP and combination of
inputs. Increase in TFP or capital to labour ratio increases
labour productivity.
Study Session 5, Reading 17
29. The Business Cycle and Its Phases
The Business Cycle is a series of fluctuations in the level of
growth in economic activity.
There are typically 4 phases of the Business Cycle:
trough
expansion
peak
contraction
Study Session 5, Reading 18
31. Business Cycle: Impact on
Inventories
As the Business Cycle enters the contraction stage, Aggregate
Demand shifts to left resulting in the accumulation of
inventories.
As the Business Cycle enters the expansion stage, Aggregate
Demand shifts to right resulting in a reduction of inventories.
Study Session 5, Reading 18
32. Business Cycle: Impact on Labour
The Business Cycle has a significant impact on employment
markets.
As economic conditions slow, firms reduce output.
Therefore, they require less labour inputs which results in
higher unemployment of labour.
As economic conditions strengthen, firms increase output.
Study Session 5, Reading 18
34. Impact on Physical Capital
Utilization
Capacity utilisation fluctuates with different stages of the
business cycle.
As economic conditions slow, firms reduce output which
lowers capacity utilization.
At this stage of the economic cycle there is very little
investment in physical capital.
Additionally, an economic slowdown often results in less
access to finance, which further restricts investment spending
by producers.
Study Session 5, Reading 18
36. Theories of the Business Cycle
Neoclassical and Austrian Schools
Markets will reach equilibrium because of the invisible hand or
free market.
Market prices are found at the point where demand = supply.
The free market ensures that resources are used efficiently.
No involuntary unemployment or labour or capital.
Equilibrium is reached as the point where MR = MC.
Fluctuation in the aggregate economy is ignored.
Study Session 5, Reading 18
37. Theories of the Business Cycle
Neoclassical and Austrian Schools
Markets will reach equilibrium because of the invisible hand or
free market.
Market prices are found at the point where demand = supply.
The free market ensures that resources are used efficiently.
No involuntary unemployment or labour or capital.
Equilibrium is reached as the point where MR = MC.
Fluctuation in the aggregate economy is ignored.
Study Session 5, Reading 18
38. Theories of the Business Cycle
Keynesian and Monetarist Schools
Generalized price and wage reduction is hard to attain.
The policies used to reduce inflation will cause Aggregate
Demand to shift to the left.
Keynesian economics supports government intervention in
form of fiscal policy.
It argues that lower interest rates may not reignite growth if
business confidence is too low.
When this occurs, a larger fiscal deficit should be borne by
government in order to bring equilibrium back.
Study Session 5, Reading 18
39. Theories of the Business Cycle
New Classical Schools
The New Classic School suggests that actions of economic
agents should be shown with the utility function and budget
constraints.
Agents are assumed to be roughly alike.
It is a dynamic model for describing fluctuations over many
periods.
Study Session 5, Reading 18
40. Theories of the Business Cycle
Models without Money - Real
Business Cycle Theory
Cycles have real causes.
Monetary variables such as inflation are assumed to have no
effect on GDP and unemployment.
External real shocks cause contractions and expansions.
It argues for no intervention from the government.
Unemployment can only be short term.
Aggregate supply is given a more prominent role.
Study Session 5, Reading 18
41. Theories of the Business Cycle
Models with Money
Inflation often a cause of business cycle.
Central bank intervention to control inflation through
monetary policy.
Neo-Keynesians put more focus on sound macroeconomic
foundations.
Study Session 5, Reading 18
42. Types of Unemployment
Structural unemployment arises due to an absence of
demand for the workers that are available.
Frictional unemployment comes from people moving
between jobs, careers, and locations .
Cyclical unemployment occurs when the unemployment
rate changes due to fluctuations in economic activity.
Long Term Unemployment: People who have been out of
job for long time.
Study Session 5, Reading 18
43. Measures of Unemployment
The Unemployment Rate is the most commonly used measure
of labour market conditions.
The Participation Rate is the ratio of the labour force to the
total working age population.
Underemployment occurs when a person has a job, but their
skill set is underemployed in their current role.
A discouraged worker is a person who has stopped looking for
a job due to the difficulty in gaining employment.
Study Session 5, Reading 18
44. Inflation
Inflation is a sustained rise in price levels.
It causes a fall in purchasing power, because one unit of
currency is now tradeable to less goods and services.
As a result, central banks try to control inflation.
The inflation rate is measured as a percentage change in a
price index.
Study Session 5, Reading 18
45. Disinflation
Disinflation is a decline in the inflation rate.
Disinflation is different from deflation.
After the period of disinflation, inflation remains positive.
Study Session 5, Reading 18
46. Deflation
Deflation is a sustained decline in price levels.
Deflation is often caused by a decrease in money supply or
credit.
Deflation can also be caused by a decrease in spending.
Study Session 5, Reading 18
47. Construction of Indices to Measure
Inflation
Laspeyres Index
Under a Paspeyres Index, the composition of the consumption
basket for measuring a price index is unchanged.
Inflation under a Paspeyres Index can be calculated as:
PL=∑Pnqo/∑Poqo
As a result, these price indices can suffer from three biases: 1)
substitution bias, 2) quality bias, and 3) new product bias.
Study Session 5, Reading 18
48. Construction of Indices to Measure
Inflation
Paasche’s Index
Paasche’s Index is a ratio of the total purchase cost of a
specified bundle of commodities at current prices, with the
value of those same commodities at base period prices. This
ratio is multiplied by 100.
It is calculated as: Pp=∑Pnqn/∑Poqn
This index tends to understate the price increases
Study Session 5, Reading 18
49. Construction of Indices to Measure
Inflation
Fisher’s Index
Fisher’s Index is the geometric mean of a Laspeyre’s and
Paasche’s index. It is calculated as:
Pb=√PLPp
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50. Comparison of Inflation Measures
The Consumer Price Index (CPI) is a commonly used measure
of inflation.
However, when comparing across countries, a user needs to
consider the different weights assigned to products within the
consumer basket of goods.
Price data can be collected from both urban and rural areas, or
just from urban areas.
Personal Consumption Expenditures (PCE) and the Producer
Price Index (PPI) can also be used to measure inflation.
Study Session 5, Reading 18
51. Uses and Limitations
Weight differences may cause an understatement of prices in a
Wholesale Price Index.
Laspeyres Index has an upward bias because of the
substitution effect.
The Private Consumption Expenditures Index (PCE) covers the
complete range of goods and services purchased by
consumers.
Price indices can also be used to deflate GDP.
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52. Factors That Affect Price Levels
Cost Push Inflation
Cost Push Inflation occurs when prices rises due to an increase
in costs.
Higher unemployment can decrease wages cost, and hence
reduce cost push inflation pressures.
Productivity per hour an important factor in limiting cost push
inflation.
Unit Labour Costs can be calculated as:
ULC = W/O
where w is total labour compensation per hour and O is
output.
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53. Factors That Affect Price Levels
Demand Pull Inflation
Demand Pull Inflation refers to the increase in prices due to an
increase in demand.
Higher rate of capacity utilization due to higher demand can be
a driver of demand pull inflation.
A surplus of money in an economy may inflate prices.
Money supply indicators can be used to track the impact that
monetary policy may have on demand pull inflation.
Study Session 5, Reading 18
54. Factors That Affect Price Levels
Inflation Expectations
Inflationary expectations can become self fulfilling.
Therefore, it is important for central banks to gain creditability
regarding their ability to manage inflation.
Some surveys can be undertaken to measure inflation
expectations, however, typically it is not easy to measure.
Past inflation trends tend to provide a gauge for expectations.
Study Session 5, Reading 18
55. Types of Economic Indicators
There are 3 broad classes of economic indicators:
Leading economic indicators have turning points which
precede changes in the overall economy.
Coincident indicators change broadly simultaneously to the
overall economy.
Lagging indicators highlight trends in economic activity later
than the overall economy.
Study Session 5, Reading 18
56. Aggregate Indicators
Economists often consider aggregate leading, lagging and
coincident indicators when getting a feel for underlying
economic conditions.
The exact components of aggregate indicators vary for
different economies.
One example if the Index of Leading Economic Indicators (LEI)
in the US which has 10 components.
Study Session 5, Reading 18
57. Monetary Policy
Monetary Policy is uses changes in the money supply and
credit in the economy to control economic growth.
It is undertaken by the central bank and often the focus is to
control inflation.
Interest rates in the economy are impacted by changes in the
money supply.
Monetary Policy can be either expansionary (lower interest
rates designed to increase economic activity) or contractionery
(higher interest rates designed to decrease economic activity).
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58. Fiscal Policy
Fiscal Policy involves government decisions about taxation and
spending.
It can be used to redistribute wealth and income, as well as to
control fluctuations in the business cycle.
Aggregate demand and the level of economic activity can be
impacted by fiscal policy.
Fiscal Policy can take neutral, expansionary and contractionery
stances.
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59. Money
Money is any object or record that is generally accepted
as payment for goods and services and repayment of debts.
Money supply can be measured by either:
M1 –Includes all physical denominations of coins and
currency, demand deposits, and traveller’s checks
M2 – This category adds M1 to all time-related deposits,
savings deposits, and non-institutional money-market funds
M3 – The broadest class of money, M3 combines all money
included in the definition of M2 and adds to it all large time
deposits, institutional money-market funds
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60. Characteristics of Money
Is easily divisible
Is difficult to be counterfeit
Has a known value
Is readily acceptable
Has a high value relative to its weight
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61. Functions of Money
Medium of exchange
Store of value
Unit of account
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62. Money Creation
Money creation is the process by which the money supply of
an economy is increased.
There are two principal stages of money creation:
The central bank introduces new money into the economy
by purchasing financial assets or lending money to financial
institutions.
The new money introduced by the central bank is
multiplied by commercial banks so that it is a multiple of
the amount originally created by the central bank.
Study Session 5, Reading 19
63. Demand and Supply for Money
The Quantity Theory of Money suggests that total spending is
proportional to the money supply, as stated in the following
formula:
In the case of Money Neutrality, an increase in the money
supply will not affect real output.
Demand for Money is the amount of wealth that citizens want
to hold.
The amount of money that citizens was to hold can be driven
by transactions, a precautionary measure, or a speculative
measure.
Study Session 5, Reading 10
65. The Fisher Effect
The Fisher Effect that the real rate of interest remains stable in
an economy over time.
Nominal rates comprise of three components:
The required real return
Expected inflation (inflation premium)
Risk premium for uncertainty
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66. Roles of Central Banks
Supplies currency in an economy.
Banker to the government.
Lender of last resort.
Banker’s bank
Provides regulation and supervision of the payments system.
Conducts monetary policy.
The gold standard was used in the past, whereby money was
exchanged for gold by the central bank.
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67. Objectives of Central Banks
Regulate the financial system.
Stimulate economic growth.
Implement monetary policy.
Manage a country’s foreign reserves.
Supply money and control credit.
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68. Implementation of Monetary Policy
Open Market Operations
Policy Rate
Reserves Requirement
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69. Qualities of an Effective Central
Bank
Central banks are given degree of freedom from government.
Credibility of the ability to influence inflation is a key quality,
as is the transparency of its actions.
Central banks should adopt and disclose a good decision
making framework comprising of a wide range of economic
and financial market indicators.
Central banks should have a clear forward looking inflation
target.
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70. Relationships between Monetary
Policy and Economic
Growth, Inflation, Interest
Rates, and Exchange Rates
Inflation - controlled by monetary policy.
Economic Growth - impact interest rates in an economy
Interest Rates - The money supply in an economy can be
decreased through open market operations, leading to an
increase in interest rates.
Exchange Rates - Some central banks attempt to manipulate
exchange rates as part of its monetary policy stance.
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71. Expansionary Monetary Policy
An increase in the money supply will result in a decrease in
interest rates which encourages economic growth and
investment.
An increase in money supply is caused by the purchase of
securities in the open market.
A central bank may lower the reserves requirement
The lower interest rates make domestic bonds less attractive,
hence demand for domestic bonds falls, and demand for
foreign bonds rises.
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72. Contractionary Monetary Policy
A central bank will control monetary policy by selling securities
on the open market.
Additionally, a central bank may raise the reserve requirement
which restricts the amount of capital that a bank can lend,
therefore decreasing the money supply.
Contractionary monetary policy lowers inflation.
Contractionary monetary policy causes a decrease in bond
prices and an increase in interest rates.
Higher interest rates lead to lower levels of capital investment.
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73. Limitations of Monetary Policy
Interest rate adjustments may not be seen by the market as a
central bank intends.
Rate rises to control inflation may actually cause long term
borrowing to be cheap.
If the central bank is not credible enough, an increase in rates
can cause economic expansion.
Money desposited by households and corporations in the
banks as deposits cannot be controlled
Increasing the willingness of institutions to expand credit in an
attempt to increase money supply is not easy.
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74. Roles and Objectives of Fiscal
Policy
Changing Fiscal Policy involves managing the economy through
changes in aggregate demand.
Changes in Fiscal Policy can be used to encourage investment,
or increase savings.
Fiscal Policy can also impact the distribution of wealth,
through the methods of taxation determination.
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75. Tools of Fiscal Policy
The level of transfer payments can be adjusted through the
social security system. For example, the amount of transfer
payments could be increased if the government wanted to
adopt of a more expansionary fiscal policy.
Tax policy should have four attributes:
Simplicity
Efficiency
Fairness
Revenue efficiency
Study Session 5, Reading 19
76. Fiscal Deficit
A budget deficit is an indicator of the fiscal stance. It occurs
when government expenditure exceeds government receipts.
A budget deficit differs from a balanced budget and budget
surplus.
Budget deficits occur when tax collection is lower, and
government spending is high.
A fiscal deficit can be financed by borrowing by the
government.
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77. Should We Be Concerned With a
Budget Deficit – Arguments For and
Against
The quality of growth in an economy is important.
In the case of good growth, a fiscal deficit is not necessarily
bad.
However, large and consistent fiscal deficits may not be good
for an economy in the long run as they may result in significant
fiscal debt balances.
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78. Difficulties in Implementation
Aggregate demand cannot be controlled completely by fiscal
policy.
The effectiveness of Fiscal Policy can also be impacted by
policymaker’s lack of complete information about the
economy.
Additionally, lags implementation may be due to:
Recognition Lag - lags in data may cause a delay in action
Action Lag - delay in taking action
Impact Lag - late actions cause a late impact
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79. Expansionary Fiscal Policy
Expansionary fiscal policy is used to stimulate economic
growth.
Results in aggregate expenditure and hence, increased
aggregate demand.
Government spending increased (G).
Decrease in taxes may also lead to higher C or I.
Leads to larger budget deficit or smaller budget surplus.
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80. Contractionary Fiscal Policy
Contractionary fiscal policy is used to restrain the economy
during or in anticipation of an inflation-inducing business-
cycle.
Results in a decrease in aggregate demand and aggregate
expenditure.
Results in a decrease in government spending.
Increase in taxes may reduce C and I spending.
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81. Interaction of Monetary and Fiscal
Policy
Both monetary and fiscal policies can be used to influence the
economy.
Easy monetary policy/tight fiscal policy
Easy monetary policy/easy fiscal policy
Tight monetary policy/tight fiscal policy
Tight monetary policy/easy fiscal policy
Study Session 5, Reading 19