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Today’s Economics Class : ) (17 April, 2012). Follow-up on Application Activity: “ Exploring the Stock Market ” and your economic analysis. Introducing Macroeconomics : The Big Picture Gross Domestic Product and measuring our economic health. Key Question # 3, Page 149.
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Today’s Economics Class : ) (17 April, 2012) • Follow-up on Application Activity: “Exploring the Stock Market” and your economic analysis. • Introducing Macroeconomics: The Big Picture • Gross Domestic Product and measuring our economic health. • Key Question # 3, Page 149.
Exploring the Stock Market • Economics Class Handouts - Exploring the Stock Market • Utilize this information to make a rational economic decision in our HCSS Economics Virtual Stock Exchange • Current Power Rankings Stephen $101,425 and 9 Trades Brock $100,202 and 2 Trades Rosa $99,703 and 4 Trades
Introduction to Macroeconomics The Big Picture and Global Dynamics
What is Macroeconomics? • It is an examination of the economy as a whole instead of the individual firm. • We examine large aggregates like the Canadian economy, the U.S. economy, and the global economy. • We look at figures such as Gross Domestic Product, Inflation, and measures of national happiness or unhappiness like the unemployment rate and the “Misery Index.”
Assessing the Economy as a Whole • How? National Income Accounting: Measures the overall performance of the economy. • It is similar to what private accounting does for the individual firm, except for the economy as a whole.
Assessing the Economy as a Whole • Who? Organizations like Statistics Canada and the Bank of Canada help to compile the necessary data. • They do this by tracking consumer and business purchases or spending.
Assessing the Economy as a Whole • Why? It helps us track the long-run course of the economy to see whether it has grown or declined, and to help us make policy decisions. • The Drummond Report and the Ontario Finance Minister had to engage in Provincial/National Income Accounting.
Gross Domestic Product (GDP) • Measures Aggregate Output: The total market value of all final goods and services produced in a given year.
GDP is a Monetary Measure • GDP is a monetary measure used to compare the relative values of goods and services over time. • GDP is generally measured every quarter or year. • It is often seen as the total amount of wealth produced by a country. • New Tools allow economists to access vast amounts of data on the health of the economy.
What Exactly Does GDP Measure? • GDP includes all goods and services produced by either domestic or foreign-supplied resources in the country. • Canadian GDP includes the market value of goods sold by both Canadian and Foreign businesses operating in Canada. • Coffee sold at Canadian owned Tim Horton’s or American owned Starbucks counts, as long as the purchase is made in Canada.
Thinking & Inquiry • The Hollowing Out of Corporate Canada
Only Final Goods Count Towards GDP. • Intermediate Goods: Goods and services purchased for resale or further processing. • Ex: The sale of wood for use in the production of a new home in Canada. • Final Goods: Goods and services purchased for final use by the consumer, not further processing. • Ex: The sale of the new house, which already includes the cost of the wood in its sale price. • NB. More details tomorrow.
GDP Excludes Non-Production Transactions • Financial Transactions: Public and Private Transfer Payments and Stock Market Transaction. Ex. Buying a stock or a bond. • Second-Hand Sales: They were counted when they were originally produced. Ex. The sale of a used car. • Black-Market Sales: Anything not reported to the government cannot be tracked. Ex. Stolen goods.
Key Question # 3 (Page 149)Assignment 2.1 • Why do national income accountants include only final goods in measuring GDP for a particular year? • Why don’t they include the value of the stocks and bonds bought and sold? • Why don’t they include the value of used furniture bought and sold? • Write down your answers during our discussion and hand them in.