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    Lecture Slides Lecture 2 Part 2

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    Teh Kim Sin
    1. The document discusses macroeconomic concepts including gross domestic product (GDP), consumption, investment, and savings. 2. It explains that GDP is the total value of final goods and services produced, and gives an example of how the value added at each stage of bread production contributes to GDP. 3. The components of aggregate demand that make up GDP are defined as consumption (spending on current needs) and investment (spending on future needs), and the sectors that engage in them (households and firms) are identified.

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    Lecture Slides Lecture 2 Part 2

    Uploaded by

    Teh Kim Sin
    14 views7 pages
    1. The document discusses macroeconomic concepts including gross domestic product (GDP), consumption, investment, and savings. 2. It explains that GDP is the total value of final goods and services produced, and gives an example of how the value added at each stage of bread production contributes to GDP. 3. The components of aggregate demand that make up GDP are defined as consumption (spending on current needs) and investment (spending on future needs), and the sectors that engage in them (households and firms) are identified.

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    1. The document discusses macroeconomic concepts including gross domestic product (GDP), consumption, investment, and savings. 2. It explains that GDP is the total value of final goods and services produced, and gives an example of how the value added at each stage of bread production contributes to GDP. 3. The components of aggregate demand that make up GDP are defined as consumption (spending on current needs) and investment (spending on future needs), and the sectors that engage in them (households and firms) are identified.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    14 views7 pages

    Lecture Slides Lecture 2 Part 2

    Uploaded by

    Teh Kim Sin
    1. The document discusses macroeconomic concepts including gross domestic product (GDP), consumption, investment, and savings. 2. It explains that GDP is the total value of final goods and services produced, and gives an example of how the value added at each stage of bread production contributes to GDP. 3. The components of aggregate demand that make up GDP are defined as consumption (spending on current needs) and investment (spending on future needs), and the sectors that engage in them (households and firms) are identified.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 7

    rlnclples of Macroeconomlcs

    LecLure 2
    Cross uomesuc roducL
    !"#$ &


    rofessor nllss Clekalns
    1
    '("$ )* +,-.-/), 0,12)$34
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    llrm
    1
    Labour
    CaplLal
    Intermediate Good
    llrm
    2
    Labour
    CaplLal
    lnLermedlaLe
    Cood
    Final Good
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    5#-67,1-.
    !"#$% '( )*'+,-.'/ 0#1,% '( !#1%2
    345
    0#1,% '(
    6/"%*7%+8#"%
    $''+2
    345
    0#1,% 9++%+
    #" :#-; !"#$%
    34< 2#1%2 1%22
    8/"%*7%+8#"%25
    1. wheat 1.8 0 = 1.80
    2. flour 3.0 1.8 = 1.20
    3. dough 4.0 3.0 = 1.00
    4. bread 4.4 4.0 = .40
    ___________
    4.40
    '("$ )* +,-.-/), 0,12)$34
    +:!9.6)$7#9
    LxpendlLure on nal
    goods and servlces Lo
    meeL lmmedlaLe
    needs.
    CCnSuM1lCn
    - Pouseholds -> Consumpuon expendlLure on nondurables
    - domesuc
    - lmporLs
    - CovernmenL
    - domesuc
    - lmporLs
    - lorelgners
    - LxporLs
    LxpendlLure on nal
    goods and servlces Lo
    meeL needs ln Lhe
    fuLure.
    lnvLS1MLn1
    - Pouseholds -> Consumpuon expendlLure on durables
    - domesuc
    - lmporLs
    - llrms
    - lanL and equlpmenL
    - lnvenLory of unsold sLock
    - domesuc
    - lmporLs
    - CovernmenL
    - domesuc
    - lmporLs
    '("$ )* +,-.-/), 0,12)$34
    +:!9.6)$7#9
    !"#$% '( )*'+,-.'/ 0#1,% '( !#1%2
    345
    0#1,% '(
    6/"%*7%+8#"%
    $''+2
    345
    0#1,% 9++%+
    #" :#-; !"#$%
    34< 2#1%2 1%22
    8/"%*7%+8#"%25
    1. wheat 1.8 0 = 1.80
    2. flour 3.0 1.8 = 1.20
    3. dough 4.0 3.0 = 1.00
    4. bread 4.4 4.0 = .40
    ___________
    4.40
    '("$ )* +,-.-/), 0,12)$34
    +:!9.6)$7#9
    "**7/!1-.* <-# ;"$9# 7*9
    Households
    The only sector that purchases imports
    Firms
    The only sector that engages in investment
    '("$ )* +,-.-/), 0,12)$34
    @.,-/9
    llrms
    ays a proporuon of
    sales as wages,
    lnLeresL, renL,
    dlvldends and Lax
    8eLalns a proporuon
    of proceeds as
    reLalned earnlngs + an
    allowance for
    depreclauon
    = buslness savlng
    Pouseholds
    8ecelves wages,
    lnLeresL, renL,
    dlvldends
    A proporuon of
    household lncomes ls
    used for consumpuon,
    Lhe resL ls used for
    household savlng and
    Lo pay Laxes
    CovernmenL
    8ecelves Lax from
    rms and households
    CovernmenL
    expendlLure

    CovernmenL savlng
    (= 1 - C)

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