Introduction to Macroeconomics

Study Notes

Introduction to Macroeconomics

Macroeconomics studies the entire economy, analyzing the overall level of economic activity.
Quesnay emphasized nature's role in economic development.
Economic equilibrium occurs when all income is spent on consumption.
Different economic sectors play a role in achieving economic goals.

Economic Sectors and Their Roles

Households own factors of production (land, labor, capital, entrepreneurship) and consume goods and services. Household spending includes necessities like food, clothing, and shelter.
Businesses produce goods and services, utilizing resources from households.
Government collects taxes from households and businesses, funding activities like infrastructure and governmental expenses.

Key Economic Indicators

Gross National Product (GNP) measures the total value of all goods and services produced within a country.
Gross Domestic Product (GDP) measures the total market value of all final goods and services produced within a country's borders.
Economic Indicator is economic data to gauge the economy's overall health.
NEDA is a key agency measuring Philippine economic performance.

National Income and Taxes

Nominal GNI is higher than real GNI due to rising product prices.
Indirect business taxes are applied to consumer goods.
Net Factor Income from Abroad (NFIA) represents the difference in income earned by Filipinos abroad and foreigners in the Philippines.
Statistical discrepancies arise from errors in measuring GNP/GNI.
Net Exports balance a country's imports and exports.

Inflation and Its Impacts

Inflation is a sustained rise in the general price level of goods and services.
Hyperinflation is rapidly rising prices, often exceeding 50% monthly.
Lenders with fixed-rate loans are most susceptible to unexpected inflation.
Causes of Inflation: High foreign debt, causing currency depreciation and increased import prices, cartels restricting output for higher prices, and monopolies limiting output.
Demand-Pull Inflation occurs when high consumer confidence, tax cuts, and growing economy boost demand beyond production capacity.
Cost-Push Inflation occurs when global disruptions (like oil supply) increase production costs, forcing price increases.

Income, Savings, and Economic Well-Being

Unemployment's impact on poor families is more severe due to limited resources.
Families below the poverty line primarily allocate income for basic needs (food, shelter, healthcare, education).
Real income is higher if income is sufficient for the cost of living.
Technological advancements can increase or decrease income inequality.

Consumption, Savings, and Disposable Income

Stock market booms increase consumption and decrease savings in the short term.
Savings functions show the relationship between income and savings.
Factors decreasing disposable income include higher payroll and personal income taxes.
Disposable income is gross income after taxes and contributions.
Personal income is the total income received by individuals and businesses.
Consumption patterns and income changes are often directly correlated.
One-time work bonuses increase consumption, but some portion is saved.

Description

This quiz covers the fundamental concepts of macroeconomics, including the roles of various economic sectors such as households, businesses, and government. It also addresses key economic indicators like GNP and GDP, essential for understanding overall economic activity. Test your knowledge and grasp these crucial macroeconomic principles!