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1、macroeconomics fifth editionN. Gregory MankiwPowerPoint Slides by Ron CronovichCHAPTER TWOThe Data of Macroeconomicsmacro 2002 Worth Publishers, all rights reservedCHAPTER 2CHAPTER 2 The Data of Macroeconomics The Data of Macroeconomicsslide 1Learning objectivesIn this chapter, you will learn about:
2、Gross Domestic Product (GDP)the Consumer Price Index (CPI)the Unemployment RateCHAPTER 2CHAPTER 2 The Data of Macroeconomics The Data of Macroeconomicsslide 2Gross Domestic ProductTwo definitions:1.Total expenditure on domestically-produced final goods and services2.Total income earned by domestical
3、ly-located factors of production CHAPTER 2CHAPTER 2 The Data of Macroeconomics The Data of Macroeconomicsslide 3Why expenditure = incomeIn every transaction, the buyers expenditure becomes the sellers income.Thus, the sum of all expenditure equals the sum of all income.CHAPTER 2CHAPTER 2 The Data of
4、 Macroeconomics The Data of Macroeconomicsslide 4The Circular FlowCHAPTER 2CHAPTER 2 The Data of Macroeconomics The Data of Macroeconomicsslide 5Value addeddefinition: A firms value added is the value of its output minus the value of the intermediate goods the firm used to produce that output. CHAPT
5、ER 2CHAPTER 2 The Data of Macroeconomics The Data of Macroeconomicsslide 6Exercise: ( (Problem 2, p.38Problem 2, p.38) )A farmer grows a bushel of wheat and sells it to a miller for $1.00. The miller turns the wheat into flour and sells it to a baker for $3.00. The baker uses the flour to make a loa
6、f of bread and sells it to an engineer for $6.00. The engineer eats the bread. Computevalue added at each stage of productionGDPCHAPTER 2CHAPTER 2 The Data of Macroeconomics The Data of Macroeconomicsslide 7Final goods, value added, and GDPGDP = value of final goods produced = sum of value added at
7、all stages of productionThe value of the final goods already includes the value of the intermediate goods, so including intermediate goods in GDP would be double-counting. CHAPTER 2CHAPTER 2 The Data of Macroeconomics The Data of Macroeconomicsslide 8The expenditure components of GDPconsumptioninves
8、tmentgovernment spendingnet exportsCHAPTER 2CHAPTER 2 The Data of Macroeconomics The Data of Macroeconomicsslide 9Consumption (C)durable goods last a long time ex: cars, home appliancesnon-durable goodslast a short time ex: food, clothingserviceswork done for consumers ex: dry cleaning, air travel.d
9、ef: the value of all goods and services bought by households. Includes:CHAPTER 2CHAPTER 2 The Data of Macroeconomics The Data of Macroeconomicsslide 10U.S. Consumption, 2001CHAPTER 2CHAPTER 2 The Data of Macroeconomics The Data of Macroeconomicsslide 11Investment (I)def1: spending on the factor of p
10、roduction capital.def2: spending on goods bought for future use.Includes:business fixed investmentspending on plant and equipment that firms will use to produce other goods & servicesresidential fixed investmentspending on housing units by consumers and landlordsinventory investmentthe change in the
11、 value of all firms inventoriesCHAPTER 2CHAPTER 2 The Data of Macroeconomics The Data of Macroeconomicsslide 12U.S. Investment, 2001CHAPTER 2CHAPTER 2 The Data of Macroeconomics The Data of Macroeconomicsslide 13Investment vs. CapitalCapital is one of the factors of production. At any given moment,
12、the economy has a certain overall stock of capital. Investment is spending on new capital. CHAPTER 2CHAPTER 2 The Data of Macroeconomics The Data of Macroeconomicsslide 14Investment vs. CapitalExample (assumes no depreciation): 1/1/2002: economy has $500b worth of capitalduring 2002:investment = $37
13、b1/1/2003: economy will have $537b worth of capitalCHAPTER 2CHAPTER 2 The Data of Macroeconomics The Data of Macroeconomicsslide 15Stocks vs. Flowsstockflowa persons wealtha persons saving# of people with# of new collegecollege degreesgraduatesthe govt. debtthe govt. budget deficitFlowStockMore exam
14、ples:CHAPTER 2CHAPTER 2 The Data of Macroeconomics The Data of Macroeconomicsslide 16Government spending (G)G includes all government spending on goods and services.G excludes transfer payments (e.g. unemployment insurance payments), because they do not represent spending on goods and services. CHAP
15、TER 2CHAPTER 2 The Data of Macroeconomics The Data of Macroeconomicsslide 17Government spending, 2001CHAPTER 2CHAPTER 2 The Data of Macroeconomics The Data of Macroeconomicsslide 18Net exports (NX = EX - IM)def: the value of total exports (EX) minus the value of total imports (IM)CHAPTER 2CHAPTER 2
16、The Data of Macroeconomics The Data of Macroeconomicsslide 19An important identityY = C + I + G + NXwhere Y = GDP = the value of total output C + I + G + NX = aggregate expenditureCHAPTER 2CHAPTER 2 The Data of Macroeconomics The Data of Macroeconomicsslide 20A question for you:Suppose a firm produc
17、es $10 million worth of final goodsbut only sells $9 million worth.Does this violate the expenditure = output identity?CHAPTER 2CHAPTER 2 The Data of Macroeconomics The Data of Macroeconomicsslide 21Why output = expenditureUnsold output goes into inventory, and is counted as “inventory investment”wh
18、ether the inventory buildup was intentional or not. In effect, we are assuming that firms purchase their unsold output. CHAPTER 2CHAPTER 2 The Data of Macroeconomics The Data of Macroeconomicsslide 22GDP: An important and versatile conceptWe have now seen that GDP measurestotal incometotal outputtot
19、al expenditurethe sum of value-added at all stages in the production of final goodsCHAPTER 2CHAPTER 2 The Data of Macroeconomics The Data of Macroeconomicsslide 23GNP vs. GDPGross National Product (GNP): total income earned by the nations factors of production, regardless of where locatedGross Domes
20、tic Product (GDP):total income earned by domestically-located factors of production, regardless of nationality.(GNP GDP) = (factor payments from abroad) (factor payments to abroad)CHAPTER 2CHAPTER 2 The Data of Macroeconomics The Data of Macroeconomicsslide 25(GNP GDP) as a percentage of GDP for sel
21、ected countries, 1997.for selected countries, 1997.CHAPTER 2CHAPTER 2 The Data of Macroeconomics The Data of Macroeconomicsslide 27Real vs. Nominal GDPGDP is the value of all final goods and services produced. Nominal GDP measures these values using current prices. Real GDP measure these values usin
22、g the prices of a base year. CHAPTER 2CHAPTER 2 The Data of Macroeconomics The Data of Macroeconomicsslide 28Real GDP controls for inflationChanges in nominal GDP can be due to:changes in prices changes in quantities of output producedChanges in real GDP can only be due to changes in quantities,beca
23、use real GDP is constructed using constant base-year prices. CHAPTER 2CHAPTER 2 The Data of Macroeconomics The Data of Macroeconomicsslide 29Practice problem, part 1Compute nominal GDP in each yearCompute real GDP in each year using 2001 as the base year.200120022003PQPQPQgood A$30900$311,000$361,05
24、0good B$100192$102200$100205CHAPTER 2CHAPTER 2 The Data of Macroeconomics The Data of Macroeconomicsslide 30Answers to practice problem, part 1Nominal GDP multiply Ps & Qs from same year2001: $46,200 = $30 900 + $100 192 2002: $51,400 2003: $58,300Real GDP multiply each years Qs by 2001 Ps2001: $46,
25、3002002: $50,000 2003: $52,000 = $30 1050 + $100 205CHAPTER 2CHAPTER 2 The Data of Macroeconomics The Data of Macroeconomicsslide 31U.S. Real & Nominal GDP, 1967-20011967-2001CHAPTER 2CHAPTER 2 The Data of Macroeconomics The Data of Macroeconomicsslide 32GDP DeflatorThe inflation rate is the percent
26、age increase in the overall level of prices.One measure of the price level is the GDP Deflator, defined asCHAPTER 2CHAPTER 2 The Data of Macroeconomics The Data of Macroeconomicsslide 33Practice problem, part 2Use your previous answers to compute the GDP deflator in each year. Use GDP deflator to co
27、mpute the inflation rate from 2001 to 2002, and from 2002 to 2003. Nom. GDPReal GDPGDP deflatorinflationrate2001$46,200$46,200n.a.200251,40050,000200358,30052,000CHAPTER 2CHAPTER 2 The Data of Macroeconomics The Data of Macroeconomicsslide 34Answers to practice problem, part 2Nom. GDPReal GDPGDP def
28、latorinflationrate2001$46,200$46,200100.0n.a.200251,40050,000102.82.8%200358,30052,000112.19.1%CHAPTER 2CHAPTER 2 The Data of Macroeconomics The Data of Macroeconomicsslide 37Working with percentage changesEX:If your hourly wage rises 5% and you work 7% more hours, then your wage income rises approx
29、imately 12%.USEFUL TRICK #1 USEFUL TRICK #1 For any variables For any variables X X and and Y Y, , the percentage change in (the percentage change in (X X Y Y ) ) the percentage change in the percentage change in X X + + the percentage change in the percentage change in Y YCHAPTER 2CHAPTER 2 The Dat
30、a of Macroeconomics The Data of Macroeconomicsslide 38Working with percentage changesEX: GDP deflator = 100 NGDP/RGDP.If NGDP rises 9% and RGDP rises 4%, then the inflation rate is approximately 5%.USEFUL TRICK #2USEFUL TRICK #2the percentage change in (the percentage change in (X X/ /Y Y ) ) the pe
31、rcentage change in the percentage change in X X the percentage change in the percentage change in Y YCHAPTER 2CHAPTER 2 The Data of Macroeconomics The Data of Macroeconomicsslide 39Chain-weighted Real GDPOver time, relative prices change, so the base year should be updated periodically.In essence, “
32、chain-weighted Real GDP” updates the base year every year. This makes chain-weighted GDP more accurate than constant-price GDP.But the two measures are highly correlated, and constant-price real GDP is easier to computeso well usually use constant-price real GDP. CHAPTER 2CHAPTER 2 The Data of Macro
33、economics The Data of Macroeconomicsslide 40Consumer Price Index (CPI)A measure of the overall level of prices Published by the Bureau of Labor Statistics (BLS) Used to track changes in the typical households cost of livingadjust many contracts for inflation (i.e. “COLAs”)allow comparisons of dollar
34、 figures from different yearsCHAPTER 2CHAPTER 2 The Data of Macroeconomics The Data of Macroeconomicsslide 41How the BLS constructs the CPI1.Survey consumers to determine composition of the typical consumers “basket” of goods.2.Every month, collect data on prices of all items in the basket; compute
35、cost of basket3.CPI in any month equalsCHAPTER 2CHAPTER 2 The Data of Macroeconomics The Data of Macroeconomicsslide 42Exercise: Compute the CPIThe basket contains 20 pizzas and 10 compact discs. prices:pizzaCDs2000$10$152001$11$152002$12$162003$13$15For each year, computethe cost of the basketthe C
36、PI (use 2000 as the base year)the inflation rate from the preceding yearCHAPTER 2CHAPTER 2 The Data of Macroeconomics The Data of Macroeconomicsslide 43cost of inflationbasket CPI rate2000$350100.0n.a.2001 370105.75.7%2002 400114.38.1%2003 410117.12.5%answers:CHAPTER 2CHAPTER 2 The Data of Macroecon
37、omics The Data of Macroeconomicsslide 44The composition of the CPIs “basket”CHAPTER 2CHAPTER 2 The Data of Macroeconomics The Data of Macroeconomicsslide 47Reasons why the CPI may overstate inflationSubstitution bias: The CPI uses fixed weights, so it cannot reflect consumers ability to substitute t
38、oward goods whose relative prices have fallen.Introduction of new goods: The introduction of new goods makes consumers better off and, in effect, increases the real value of the dollar. But it does not reduce the CPI, because the CPI uses fixed weights.Unmeasured changes in quality: Quality improvem
39、ents increase the value of the dollar, but are often not fully measured. CHAPTER 2CHAPTER 2 The Data of Macroeconomics The Data of Macroeconomicsslide 48The CPIs biasThe Boskin Panels “best estimate”:The CPI overstates the true increase in the cost of living by 1.1% per year.Result: the BLS has refi
40、ned the way it calculates the CPI to reduce the bias.It is now believed that the CPIs bias is slightly less than 1% per year. CHAPTER 2CHAPTER 2 The Data of Macroeconomics The Data of Macroeconomicsslide 50CPI vs. GDP deflatorprices of capital goodsincluded in GDP deflator (if produced domestically)
41、excluded from CPIprices of imported consumer goodsincluded in CPIexcluded from GDP deflatorthe basket of goodsCPI: fixedGDP deflator: changes every yearCHAPTER 2CHAPTER 2 The Data of Macroeconomics The Data of Macroeconomicsslide 51Two measures of inflation16 14 12 10 8 6 4 2 0 -2Percentagechange194
42、819531958196319681973Year19781983198819931998CPIGDP deflatorCHAPTER 2CHAPTER 2 The Data of Macroeconomics The Data of Macroeconomicsslide 52Categories of the populationemployed working at a paid job unemployed not employed but looking for a job labor force the amount of labor available for producing
43、 goods and services; all employed plus unemployed persons not in the labor force not employed, not looking for work. CHAPTER 2CHAPTER 2 The Data of Macroeconomics The Data of Macroeconomicsslide 53Two important labor force conceptsunemployment rate percentage of the labor force that is unemployedlab
44、or force participation rate the fraction of the adult population that participates in the labor forceCHAPTER 2CHAPTER 2 The Data of Macroeconomics The Data of Macroeconomicsslide 54Exercise: Compute labor force statisticsU.S. adult population by group, April 2002Number employed = 134.0 millionNumber
45、 unemployed = 8.6 millionAdult population = 213.5 millionUse the above data to calculatethe labor forcethe number of people not in the labor forcethe labor force participation ratethe unemployment rate CHAPTER 2CHAPTER 2 The Data of Macroeconomics The Data of Macroeconomicsslide 55Answers:data: E =
46、134.0, U = 8.6, POP = 213.5labor forceL = E +U = 134.0 + 8.6 = 142.6not in labor forceNILF = POP L = 213.5 142.6 = 70.9unemployment rateU/L = 8.6/142.6 = 0.06 or 6.0%labor force participation rateL/POP = 142.6/213.5 = 0.668 or 68.8%CHAPTER 2CHAPTER 2 The Data of Macroeconomics The Data of Macroecono
47、micsslide 57Employed workers help produce GDP, while unemployed workers do not. So one would expect a negative relationship between unemployment and real GDP.This relationship is clear in the dataOkuns LawCHAPTER 2CHAPTER 2 The Data of Macroeconomics The Data of Macroeconomicsslide 58Okuns Law195119
48、8419992000199319821975Change in unemployment rate10 -3-2-1012438 6 4 2 0 -2Percentage change in real GDPOkuns Law states that a one-percent decrease in unemployment is associated with two percentage points of additional growth in real GDPCHAPTER 2CHAPTER 2 The Data of Macroeconomics The Data of Macr
49、oeconomicsslide 59Chapter Summary1.Gross Domestic Product (GDP) measures both total income and total expenditure on the economys output of goods & services.2.Nominal GDP values output at current prices; real GDP values output at constant prices. Changes in output affect both measures, but changes in
50、 prices only affect nominal GDP. 3.GDP is the sum of consumption, investment, government purchases, and net exports. CHAPTER 2CHAPTER 2 The Data of Macroeconomics The Data of Macroeconomicsslide 60Chapter Summary4.The overall level of prices can be measured by eitherthe Consumer Price Index (CPI), t
51、he price of a fixed basket of goods purchased by the typical consumerthe GDP deflator, the ratio of nominal to real GDP5.The unemployment rate is the fraction of the labor force that is not employed. When unemployment rises, the growth rate of real GDP falls. CHAPTER 2CHAPTER 2 The Data of Macroeconomics The Data of Macroeconomicsslide 61
