Macroeconomics
Macroeconomics is the study of large-scale economic issues, such as inflation, GDP (GDP), and unemployment. It helps form the basis of a large part of government economic policy.
Intro to Macroeconomics
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There are three main ways to calculate GDP, the production, expenditure, and income methods. The production method adds up consumer spending (C), private investment (I), government spending (G), then adds net exports, which is exports (X) minus imports (M). As an equation it is usually expressed as GDP=C+G+I+(X-M).
Learn More: How to Calculate the GDP of a Country -
The four factors of production are land, labor, capital and entrepreneurship.
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Nominal gross domestic product (GDP) is the unadjusted GDP number. Whenever an economic figure is adjusted for inflation it is referred to as a real figure, so real GDP is nominal GDP adjusted for inflation.
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PPP is a way of measuring the price of goods and services between countries while adjusting for the relative exchange rates of their currencies. It is an attempt to better understand what people can buy and produce in a country without the differences in relative value of each country’s currency distorting it.
Learn More: What Is Purchasing Power Parity (PPP)?
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Per-Capita Gross Domestic Product (GDP)
Per-capita GDP is a measure of a country’s overall economic output per person. It’s calculated by taking the GDP and dividing it by the country’s population.
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Aggregate Demand
Aggregate demand is the total demand for finished goods and services in an economy as measured by the monetary amount paid for those goods and services at a particular point in time.
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Multiplier Effect
The multiplier effect refers to the phenomenon that adding or subtracting capital from the economy has a larger effect on economic production than the amount added or subtracted.
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IS-LM Model
IS-LM is an economic model that helps show the interaction between interest rates and the economy.
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Balance of Payments (BOP)
Balance of payments (BOP) is the sum of all economic activity done by individuals, companies, and governments within one country with people, companies and governments in other countries.
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Cross Elasticity of Demand
The cross elasticity of demand is how much the demand for one good changes when the price of a different good changes.
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Regression
Regression is a statistical method that determines the strength of the correlation between a dependent variable and one or more other, independent, variables.
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Economic Growth
Economic growth is when more goods and services are produced somewhere than were being previously produced.
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Stagflation
Stagflation is a period of persistently low economic growth and high inflation.
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