Chapter 13

The economy and construction:

Measurement and manipulation

Construction industry

• The construction industry –including manufacturers of building products, equipment and components, and the various professional services provided by architects, surveyors, engineers and property managers-typically accounts for about 15-16 per cent of total annual activity.

Measuring economic activity

• Fig 3.1 the circular flow of income, output and expenditure

• GDP and growth• Real value• Recession• GDP and Construction• Leakages (savings, imports and tax) and

injections (investment, exports and government spending)

The multiplier theory

• MPL – marginal propensity to leak

Aggregate Demand

• Aggregate Demand can be defined as the total spending on goods and services produced in a whole economy.

• AD=C+I+G+X-M

• AD=C+I+G+NX

Aggregate Supply

• Aggregate supply can be regarded as total production, and clearly many factors influence its size such as the level of profits, ease of movement into and out of markets, the level of wages, the efficiency of capital and labour, the level of fixed costs, etc.

In order to understand the true purpose of the AS curve, we

examine four situations

• 1. large amount of unused capacity

• 2. full capacity

• 3. an intermediate range between the two

• 4. increasing capacity in the long run.

Measuring Environmental Impacts

• Measuring the ecological footprint

• The ecological footprint and construction