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EC4004Lecture 1
Growth Matters
<1>
<2>Setup
Recap<3>
Growth Matters
<1>Setup
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Office Hours: TBA
</1>Setup
<2>Recap
1. Economic Models2. Supply and Demand
3. Measuring the Macroeconomy (Handout)
</2>Recap
<3>Growth Matters
GDP: Sum of all final goods and services produced in the economy
Growth rate of real GDP for year t
= (( Yt− Yt−1)/ Yt−1)− 1
Multiply by 100 to get the growth rate of real GDP in
percent per year.
Example: Y2006=105; Y2005=100
Growth Rate = 105-100/100-1*100 =5%
National Income Accounting
Nominal GDP measures the Euro (or dollar, etc.) value of all the goods and services that an economy produces during a specified period, such as a year.
Flow variable - it measures the Euro amount of goods produced per unit of time, such as a year.
GDP in current Euros
•Calculating Real GDP
•Multiply each year’s quantity of output of each good by the price of the good in a base year.
•GDP in constant Euros
•Chain-weighted real GDP
(nominal GDP)/(implicit price level) = real GDP
or
implicit price level = (nominal GDP)/(real GDP)
www.gapminder.org
</3>Growth Matters
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Growth TheoryRead Barro Chapter 3