Macroeconomics is the branch of economics that studies the overall workings of an economy, such as total income and output; aspects of the economy are viewed in aggregate. For instance, when referring to labor in macroeconomics, the focus is on all workers within an economy, not the choices of an individual worker.
The information presented within Section A: Basics, is preliminary material and will not be tested directly on your upcoming exam. However, we recommend reviewing this material as you will need to know it in order to understand the more advanced topics discussed later.
Gross Domestic Product (GDP) and Gross National Product (GNP)
Gross Domestic Product (GDP) and Gross National Product (GNP) are the two most common measures of a nation's economic output.
Gross domestic product is defined as the value of all goods and services produced within a nation during a particular period of time (typically a year). Market prices are used to determine value and only "final" goods and services (those consumed by the end user) are included.
Gross National Productmeasures the income of all of a nation's citizens, even if that income was earned abroad. Amounts that foreigners earn within the nation's boundaries are not included.
InvestingLearn what the GNP truly represents, and how its misuse can manipulate the facts.
InvestingThese indicators give investors and experts some data to work with, but they're far from perfect measures.
TaxesGross income is an individual’s total income before taxes and other adjustments are considered.
InsightsThe economy is the production and consumption activities that determine how scarce resources are allocated in an area.
InvestingGross sales represents the overall revenue of a company through its sales activities.
InsightsMacroeconomic factors like GDP, Inflation, and Retail Sales affect the value of your portfolio. Understanding these economic indicators is vital for every investor in the marketplace.
Small BusinessFind out how your startup's gross margin can impact your business, including why a mediocre margin may spell disaster for a budding business.
TradingThe GDP price deflator adjusts gross domestic product by removing the effect of rising prices. It shows how much an economy’s GDP is really growing.