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Lecture notes ECON10241

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Comprehensive Macroeconomics 1 Lecture Notes (10241), which include clear diagrams, detailed theory explanations, and fully worked examples. These notes are perfect for students looking for a structured guide to key macroeconomic concepts and practical applications. Ideal for revising or gaining a ...

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  • September 15, 2024
  • 42
  • 2023/2024
  • Class notes
  • Paul middleditch
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Macroeconomics : study of the economy as a whole


↳ focus on
aggregated variables
Economy =
System of trace

↳ grovides as indication on the cerdition of the
economy of goods and services. O in a
society
as a whole
variables Macro-economy
revenues
:



income of (Measure of
·
National >
- sum production economic ablity
·
Economic growth & growth in national incere [increase in r .
GDP]
level
Inflation
· >
- change in
aggregale price
·
unemployment & incidence of worked losing jobs & policymakers are concerned about


·
InternationalTrade - (x-N) - not execb


* As firs fire national income increases
grow over .




Firm revenue & = Nominal GDP &


Economic
growth -
change in r .
GDP/in national incere
when economy
is
growing of grath is
positive and
cremployers is falling
↳ Developing economies fend to
grow
at a
faster rate
.

at slower rate
older
a
* This is due to economic volatility economics grow
↳ Price is orglable
can care social unrest
>
-



Unemployment iscydicubecausegruthi cica empym dredele
a



* unemployment rides when
growth falls
y key fader
in policy making

price stability
is to
Economic
policy used acheive .
business + confidence growth
· Inflation causes lover export competitiveness , decreases consumer
,
lover

more unemployment

national incove GDP (gross domestic product)
Measuring
:



method I Sum of all production
· output
·
Income method I Sum of all incove

methed
a of all
· Experditie sun
expenditure

, Method Adds
Output :
of all
the prices and quantities
GVA value added
To fix the problem of double caling - Sum of final goods or (gross
valued
· governions activity is as cast
↳ sum of sales -
Sum of intermediate


· ownershing of houses include inpuled rent
grod
GDP
·
taxes such as rAF are only included In an market prices
occurs when
double conting
of
Incure methed : Income of all factors of production there are
multiple steps
· Wages and Sultrie (labour prediction
·
Prehb Centrepreneurship
:




·
Rent Clud)

Interest
· (Gayikall Impulika rent value placed on an


Transfer asset obred
· paynen's are excluded


6
Expenditure method : GDP = c + 1 * G + (x N) -
y= 0


F -
basically All
model of expenditure

GNP = Gross national preduct : GNP = GDP + ret incre
from abroad

Net national product ONNP) : Nip = GNP-depreciation



circular flow of income another
to one
- All equal
at the
Produchun I because they flow
same
.
rale

firms X
= each alter



incere

C & ext erditure *
to
Income flow

experditie flow
is equal

Households

save flow of
money
in the economy
is nomiral value
Money a




·
Nominal GDP measures value of final goods using current prices

·
Real GDP Measures these values using the prices of a base year

& multiply & by base year griva
area it sure
quarties of output I
We
changes in Nominal GDP can be due to changes in price or .




which caused
real GDP be due to changes in quantity
.
changes In can only
↳ eliminates affect of inflation

, Actual
growth vs potential growth :




Actual growth - increase in actual observed
·
output
Potential
·
output - increase in economy's capacity


Actual growth flackcales around putential outout (ty)
due
fluctuations to changes + Shocks

S
↳ economic in AD

represented on business cycle.

r . GDP

capacity
Economic

Cauy)
normal output




u short-run fluckalich
=
of the eccrory


7 time
O
z




Long-term economic
growth :

Production function : Y = FCK , (51bru
capital
Long-term growth =
> increase in to
seconomic capacity
diminishes
·
As labour keeps increasing -> eventually produclinty
↳ due to overcrowding= law of diminishing returns.

Productinly =
output per
worker


Factor labour
productivity : Marginal prod of

MPL = ecluye of production function Y = FC



MPL & = ) long-term economic
growth (yea)

Demand-side policies : (Short-run Supply-side policy Clury-run) :




feeding fiscul evlicy policies
in
·
increase goul ·
labour market

· lowering taxes ·
increasing technology
·
murchery policy ·
encouraging
investment

, Sustainable
growth :


·
critical planetary brundaries Woled (biodimsly) by needs of socibly

↳ depletion of commun pool resources
An ennronmental ceiling exist to identify violation .




·




berclib of economic
grah
: sesb of economic growth ,
increased consumption general extra was
· ·
may
reduction of aler macro
problems distribution of incere
· o
regulite
· scape for redistribution o environmental casy

batter living strderds &
·
mere income =
schepletion resucrees




Reasonable growth- same as inflation (2 5%)
.




to high great -f unostainable
high inflation

Inflation can come back
inflation
↳ stagflation = low
growth thigh
3 Chigh VE)
Inflution is
explosive - in can
grow rapidly
driven
·
Prices are by expectation
Central bank attem to manipulate the expectation of inflation in order to arrive
·


at the desired here

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