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Macro-economical indicators (Monetary Policy: (This can be measured with:,…
Macro-economical indicators
Inflation
Broad increase in prices of goods and services
Key concept
CPI is the most commonly used measures of inflation
GDP deflator converts nominal GDP to real GDP
Types of inflation
Demand-pull
Too much money chasing too few goods.
Cost-push
Rising prices in goods or services with no suitable alternatives
Nominal GDP
measures a country’s gross domestic product using current prices, without adjusting for inflation.
also call current-dollar statistics
three measurement methods
production
expenditure.
income
Current Account Balance or Balance of Payments
A system that record the transactions of goods and products of the countries between themselves.
Formula
CA=(X-M)+NY+NCT
Exchange Rate:
An exchange rate is the price of a nation’s currency in terms of another currency.
Has a two components
Domestic Currency
Foreign Currency
Formula to measure it
1.12 - 1.0950 = 0.025/1.0950 = 0.023. Multiply by 100 to get the percentage markup: 0.023 x 100 = 2.23%.
Monetary Policy:
Monetary policy consists of the actions of a centralbank,other regulatory committee.
determines the size and rate of growth of the money supply, which in turn affects interest rates
This can be measured with:
Open market operations
Discount rate
Reserve requirements
Balance
Condition in which everyone gets the same in equal proportions.
Governamental Budget
Financial statement that present the government´s revenues and expenditures of the ensuing financial year.
Role of generating accountability for the actions of government at various levels.
Alternatives
Administrative
Current and capital
Cash and unified
Fiscal Policy:
Fiscal policy refers to the use of government spending and tax policies to influence macroeconomic conditions.
Measure Fiscal policy
Fiscal measures are frequently used in tandem with monetary policy to achieve certain goals.
Unemployment
Civilian workers looking for a job and not receiving wages
Represent wasted potential production
Significant concern within macroeconomics
Sub-types
Structural
Workers are not qualified for the jobs that are available
Frictional
Imperfect information and difficulties matching qualified workers with jobs
Cyclical
During recessions, there is an inadequate demand for labor and wages are slow to fall to a point where the demand and supply of labor are back in balance.
Real GDP
Real gross domestic product is a measurement of economic output that accounts for the effects of inflation or deflation.
formula
R=N/D
nominal GDP divided by the deflator:
more realistic assessment of growth than nominal GDP.
measures the final output of all goods and services
Used to Calculate Growth
the percentage change in real GDP is the GDP growth rate.