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UU Introduction to Economics and Business Economics - Summary of Diane Coyle Text 'From the Eighteenth Century to the 1930s: War and Depression'
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Summary – (1) From the Eighteenth Century to the 1930s: War and Depression – Coyle:Reading and Writing Assignment: Introduction and Conclusion to the Coyle Text
*Main idea: The different ways of measuring the (national) economy as a whole. The
development of measurements and used factors (changing measurement aims, services
included or not)…
*Context: After the Great Depression, governments and economists were looking for a way to
measure the economy to be able to prevent another Depression. Additionally, governments
wanted to know how much money could be used for war effort (the Second World War).
After the war, economists collected data and created statistics to determine economic growth
and national economies as a whole.
*Important economic and financial data about (NATIONAL) incomes, expenditures,
population and land led to more economic insight on a country’s population and therefore
insight on chances of winning battles and/or wars (first in England, later France did the same)
and growing economically extra taxes from the population to use for war effort.
*The GDP (Second World War invention), the sum of all that is spent in a national economy,
was the first attempt to measure the economy as a whole. The national income, in practice,
cannot be calculated without controversy, because it can be discussed what to include and
what not. The national income depended on how much was available to spend.
(
*Before the Depression and the Great War, the scale of the economy was not measured by
GDP but by means of national income forerunner of the GDP.
)
*Over numerous decades in the past, there have been many definitions of national income /
GDP measures adaptations were made because of changes in countries’ governments
(which became more involved over time), policies and changes in human behaviour (therefore
the economy changes drastically) economists saw differences in measuring income (GDP,
Smith and Keynes), welfare (Kuznets) and well-being over time, the government got more
involved first, all they did was raise taxes, then they got involved, intervened in the
modern times of measuring GDP.
*GDP can be measured through three ways: EXPENDITURE, INCOME or OUTPUT
(author’s argument is that output should be the way to measure the national income).
*The GDP can be seen as a ‘Circular Flow’.
*The Equation for GDP: Y = C + I + G + (X – M) = Consumption + Investments +
Government + (Export – Import)
*Numerous economists came up with theories and ways of determining the national income,
but over time these theories were overthrown / overturned / discarded. Due to extensive
economic growth, the Great Depression and the wars, the economist that was believed to have
come with the best ideas was Keynes: GDP statistics and the Keynesian macroeconomic
policy were used more often dealing with the prevention of a new Depression in the post-war
era ( the story of GDP is also the story of macroeconomics).
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