The basical macroeconomics indicators

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3. Gross investment can be divided into: replacement investment (required to maintain the nation's stock of capital at its existing level), and net investment (the net increasereaserease in the stock of capital) Positive net investment is associated with a grown economy, negative - with a decreaselining economy.

4. By the increasereaseome or allocations approach GNP is calculated as a sum of compensation to employees, rents, interest, proprietors' increasereaseome, corporate increasereaseome taxes, dividends, undistributed corporate profits, and the two nonincreasereaseome charges (capital consumption allowance & inderect business taxes)

5. Other important national increasereaseome accounting measures are derived from the GNP. Net national product (NNP) is GNP less the capital consumption allowance. National increasereaseome (NI) is total increasereaseome earned by resource suppliers; it is found by subtracting inderect busi-ness taxes from NNP. Personal increasereaseome (PI) is the total increasereaseome paid to households prior to any allowance for personal taxes. Disposable increasereaseome (DI) is personal increasereaseome after personal taxes have been paid. DI measures the amount of increasereaseome households have available to consume or save.

6. Price indexes are computed by comparing the price of a specific collection or "market basket" of output in a given period to the price (cost) of the same market basket in a base period and multiplying the outcome (quotient) by 100. The GNP deflator is the price indexused to adjust normal GNP to to account for inflation or deflation and thereby to obtain real GNP.

7. Nominal (current dollar) GNP measures each year's output valued in terms of the prices prevailing in that year. Real (constant dollar) GNP measures each year's output valued in terms of the prices prevailing in a selected base year. Because it is adjusted for price level changes, real GNP measures the level of production activity.

Nominal GNP

—————————————— = Real GNP

Price index (in hundredths)

8. The various national increasereaseome accounting measures exclude nonmarket and illegal transactions, changes in leisure and product quality, the composition and distribution of output, and the environmental effects of production. Nevertheless, these measures are resonably accurate and very useful indicators of the nation's economic performance.

Aggregate demand & Aggregate supply

Aggregate demand - is a schedule, graphically represented by a curve, which shows various amounts of goods and services - the amount of real national output - which consumers, businesses and government collectively will desire to purchase at each possible price level.

Conversely, the higher the price level, the smaller will be the national output they desire to purchase. That's exactly what indicates the downsloping AD curve. The rationale for a downsloping AD curve rests primarily upon three factors.

1. Interest-rate effect

As the price level rises so will interest rates and risng interest rates will cause reduction in certain kinds of consumption and investment spending. AD curve assumes that the suplly of money in the economy. When the price level increasereasereases, consumers will need to have more money on hand to make purchases and businesses will similarly require more money to meet the payrolls and purchase other needed inputs. In short, a higher price level will increasereaserease the demand for money. Given a fixed supply of money, this increasereaserease in demand will drive up the price paid for the use of money. that price, of course, is the Interest Rate. High IRs will curtail certain interest -sensetive expenditures by businesses & households.

Conclusion: A high price level - by increasereasereasing the demand for money and the Interset Rate - causes a reduction in the amount of real output demanded.

2. Wealth effect

A second reason why the AD curve is downsloping involves the Wealth or Real Balances Effect. The idea here is that at a higher price level the real value of purchasing power of the accumulated finansial assets - In particular, assets with fixed money values such as savings, accounts or bonds - held by the public will deminish. Conversely a decreaseline in the price level will increasereaserease the real value or purchasing power of one's wealth and tend to increasereaserease spending

3. Foreign Purchases effect

The Foreign Purchases effect of a price-level increasereaserease results in a decreaseline in the aggregate amount of American goods and services demanded. Conversely, a relative dicline a our price level will reduce our imports and increasereaserease our exports, Thereby, increasereasereasing the NE component of American AD

Реферат опубликован: 12/11/2009