人民大学：《宏观经济学》（英文版） Lecture 2 Intermediate Macroeconomics

Intermediate Macroeconomics Lecture 2

Intermediate Macroeconomics Lecture 2

>8 The Data of Macroeconomics t Measure of economic activity Gross Domestic Product(GDP) Total expenditure on domestically-produced final goods and services Total income earned by domestically-located factors of production

The Data of Macroeconomics Measure of economic activity Gross Domestic Product (GDP) Total expenditure on domestically-produced final goods and services Total income earned by domestically-located factors of production

>8 The Data of Macroeconomics Calculation of gDP ) Final goods(no intermediate goods, value added) x 2) Domestically produced x *Gross National Product (GNP Total income earned by the nation's factors of production, regardless of where located 3)Used goods(not included) t 4) Inventories sold GDP: go bad lose value

The Data of Macroeconomics Calculation of GDP 1) Final goods (no intermediate goods; value added)  2) Domestically produced  *Gross National Product (GNP) Total income earned by the nation’s factors of production, regardless of where located 3) Used goods (not included)  4) Inventories sold → GDP; go bad → lose value

GNP VS GDP GNP V S. GDP 100000 80000 亿元60000 40000 20000 19781981198419871990199319961999 GNP ear U GDP

GNP v.s. GDP 0 20000 40000 60000 80000 100000 亿元 1978 1981 1984 1987 1990 1993 1996 1999 Year GNP v.s. GDP GNP GDP

>8 The Data of Macroeconomics x Nominal v.s. Real gDP current year price or base year's price N omina ∑f4xQ 04 Rea=∑oxQo4 gdP deflator nominal GDP/real GDP

The Data of Macroeconomics Nominal v.s. Real GDP current year price or base year’s price Nominal = Real = GDP deflator = nominal GDP/real GDP P Q 04 04  P Q 90 04 

>8 The Data of Macroeconomics t Measure of inflation Consumer price Index(cPi Current price of base year basket of goods 100 Base year price of base year basket of goods 1×O 。×O 90

The Data of Macroeconomics Measure of inflation Consumer Price Index(CPI) = = Current price of base year basket of goods *100 Base year price of base year basket of goods     90 90 04 90 P Q P Q

>8 The Data of Macroeconomics eXample P90P04Q90Q04 Apple 10201000|2000 P ear 0.81.520002000 Nectarine1.52.520003000 Peach 1.530005000 Banana 1.51 20008000

The Data of Macroeconomics Example P 90 P 04 Q 90 Q 04 Apple 1.0 2.0 1000 2000 Pear 0.8 1.5 2000 2000 Nectarine 1.5 2.5 2000 3000 Peach 1 1.5 3000 5000 Banana 1.5 1 2000 8000

>8 The Data of Macroeconomics CPI VS GDP Deflator 1) GDP includes all the g s produced in the economy: CPi has a basket of some g s 2) GDP deflator includes only domestic products CPI includes imports 3) GDP deflator has a weighted basket of goods CPI has a fixed basket(quantities wont change)

The Data of Macroeconomics  CPI vs. GDP Deflator 1) GDP includes all the G & S produced in the economy; CPI has a basket of some G & S 2) GDP deflator includes only domestic products; CPI includes imports. 3) GDP deflator has a weighted basket of goods; CPI has a fixed basket (quantities won’t change)

>8 The Data of Macroeconomics CPI V S. GDP Deflator 3.50E+00 3.00E+00 2.50E+00 2.00E+00 1.50E+00 1.00E+00 5.00E-0 0.00E+00 8888d88s98s99 CPI Ye ear gdp deflator

The Data of Macroeconomics CPI v.s. GDP Deflator 0.00E+00 5.00E-01 1.00E+00 1.50E+00 2.00E+00 2.50E+00 3.00E+00 3.50E+00 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 Year CPI GDP deflator

>8 The Data of Macroeconomics CPI may overstate inflation Consumers may substitute away from more expensive goods e.g. 1978-1981US price rose 9. 1%o per year according to the gdp deflator; according to CPl, price rose 11.2%o per year. Why?

The Data of Macroeconomics CPI may overstate inflation Consumers may substitute away from more expensive goods. e.g. 1978-1981 U.S. price rose 9.1% per year according to the GDP deflator; according to CPI, price rose 11.2% per year. Why?