Macroeconomıc Theory (ENG) — Ünite 1 Soru-Cevap

The primary subjects of macroeconomics are income distribution, total output and consumption, inflation, and unemployment.

The following are the kinds of questions that macroeconomics seeks to answer:

• What will the national income be in 10 years?
• Can unemployment rates be reduced by providing employment opportunities?
• Under the influence of which factors will total expenditures and total savings be determined?
• What are the reasons that lead the economy to collapse and how should economic policies be used to get rid of them?
• How can public deficits and foreign trade deficits be prevented?

Keynes provided a justification for the ongoing high unemployment rate in his book. He based his reasoning on a wage and price adjustment assumption that differed significantly from the classical assumption.

Keynes thought that the best way to deal with high unemployment was for the government to purchase more goods and services, which would raise the demand for output. Keynes maintained that this approach would reduce unemployment because firms would need to hire more people to fulfil the increased demand for their products. Keynes also believed that newly recruited individuals would have more money available for spending, which would add to the demand for goods and services and boost employment even further.

According to Keynesian theory, unemployment might continue because wages and prices do not adapt to balance the number of individuals who want to work with the number of people that enterprises want to hire.

Government spending boosts the economy by more than what is spent. This is called the Keynesian multiplier.

Measurement is essential to scientific research. In order to make new discoveries, compare competing theories, and predict future events or trends, it is important to measure things correctly. For a serious understanding of the economy, it is not only possible to measure the economy carefully, but it is also necessary to do so.

Only final goods and services are included in GDP. Items that are used to manufacture other goods rather than being sold to end purchasers—what is referred to as intermediate goods—are not included individually in the GDP.

Stock and bond trades are the examples of market transactions that are not included in GDP since they do not involve the actual production of goods and services.

Being a measure of the value of production in terms of market prices makes GDP vulnerable to fluctuations in the average price level.

The price level determines both the GDP value and production.

The following ways are the national income accounts which based on the idea that the amount of economic activity in a given period of time can be measured:

• The quantity of output generated, excluding the one that is consumed in intermediate phases of production (the production approach)
• The earnings obtained by the output producers (the income approach)
• The sum of the spending made by output’s final consumers (the expenditure approach).

The equivalent over any given time frame of the following is called the fundamental identity of national income accounting:

total production = total income = total expenditure

Consumption is the largest component of expenditure.

The income–expenditure identity equation is   

The distinction between GNP and GDP is in how capital and labor created output outside their native (domestic) countries are treated. While gross domestic product (GDP) refers to the value of production that takes place inside a country, gross national product (GNP) refers to the market value of new final products and services that have been created by the domestic elements of production during the present time.

Nominal GDP is a measure of currently produced goods and services valued at current market prices while Real GDP is the total value of final goods and services calculated by using market prices from a base year.

GDP per capita is the gross domestic product divided by midyear population. It gives us the average standard of living of the country. It indirectly allows for qualitative characteristics such as literacy and health, but not by explicitly addressing them.

The main factors examined are aggregate output in the economy, the aggregate price level, employment and unemployment, the inflation rate, wage rates, and foreign exchange rates.

The equation used to calculate the labor force is L = N + U