Chapter 7 - The first step into macroeconomics. After reading the material in this chapter, you should be able to: Define gross domestic product (GDP) and distinguish between final goods and services and intermediate inputs, list and discuss the components of GDP, explain what GDP does not include. compare GDP and GDP per capita across countries. | Chapter 7 The First Step into Macroeconomics McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved. Learning Objectives Define gross domestic product (GDP) and distinguish between final goods and services and intermediate inputs. List and discuss the components of GDP. Explain what GDP does not include. Compare GDP and GDP per capita across countries. 7- Macroeconomics Macroeconomics studies the economy as a whole. Core concepts include the issues of output, growth, inflation, and unemployment. Questions raised include: Is the economy heating up or slowing down? Are prices rising too quickly? Are there jobs available for students graduating from college? What will happen to interest rates for car loans and mortgages? 7- Measuring the Economy Measuring the size of the economy is done in order to identify economic problems, diagnose the causes, and figure out what the right policy might be to fix them. But measuring the size and growth of the economy is not an easy task. In the 1930s, Simon Kuznets developed a framework for measuring the economy. 7- Measuring the Economy Today, the Bureau of Economic Analysis (BEA), the Bureau of Labor Statistics (BLS), the Census Bureau, and the Federal Reserve are the main statistical agencies in Washington. They conduct surveys, collect data, and regularly publish reports on the key economic statistics. These include production, unemployment, inflation, productivity, and foreign trade. 7- The Basics of Gross Domestic Product Gross Domestic Product (GDP) is the dollar value of the output of the national economy. All the statistics that feed into the process of measuring GDP are known as the system of national accounts. The process requires measuring the output and price of over a million goods and services. 7- The Basics of Gross Domestic Product The problem in measuring GDP is that different types of goods and services are each measured in different units. For example, how | Chapter 7 The First Step into Macroeconomics McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved. Learning Objectives Define gross domestic product (GDP) and distinguish between final goods and services and intermediate inputs. List and discuss the components of GDP. Explain what GDP does not include. Compare GDP and GDP per capita across countries. 7- Macroeconomics Macroeconomics studies the economy as a whole. Core concepts include the issues of output, growth, inflation, and unemployment. Questions raised include: Is the economy heating up or slowing down? Are prices rising too quickly? Are there jobs available for students graduating from college? What will happen to interest rates for car loans and mortgages? 7- Measuring the Economy Measuring the size of the economy is done in order to identify economic problems, diagnose the causes, and figure out what the right policy might be to fix them. But measuring the size and growth of the
