文档介绍：Measuring a Nation’s e
Chapter 22
Microeconomics
Microeconomics is the study of how individual households and firms make decisions and how they interact with one another in markets.
Macroeconomics
Macroeconomics is the study of the economy as a whole.
Its goal is to explain the economic changes that affect many households, firms, and markets at once.
Macroeconomics
Macroeconomics answers questions like the following:
Why is average e high in some countries and low in others?
Why do prices rise rapidly in some time periods while they are more stable in others?
Why do production and employment expand in some years and contract in others?
The Economy’s e and Expenditure
When judging whether the economy is doing well or poorly, it is natural to look at the total e that everyone in the economy is earning.
The Economy’s e and Expenditure
For an economy as a whole, e must equal expenditure because:
Every transaction has a buyer and a seller.
Every dollar of spending by some buyer is a dollar of e for some seller.
Gross domestic product (GDP) is a measure of the e and expenditures of an economy.
It is the total market value of all final goods and services produced within a country in a given period of time.
Gross Domestic Product
The Circular-Flow Diagram
The equality of e and expenditure can be illustrated with the circular-flow diagram.
The Circular-Flow Diagram
Firms
Households
Market for
Factors
of Production
Market for
Goods
and Services
Spending
Revenue
Wages, rent, and profit
e
Goods & Services sold
Goods & Services bought
Labor, land, and capital
Inputs for production
The Measurement of GDP
GDP is the market value of all final goods and services produced within a country in a given period of time.