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Macroeconomics - Gross Domestic Product (GDP)

Gross domestic product, or GDP for short, is the most widely used indicator of economic activity. It holds extraordinary importance in terms of measuring the health of an economy, and is frequently quoted even in mainstream media.

 

This course describes how GDP can be measured, using the expenditure, income, and production approaches. It shows how to calculate real GDP from nominal GDP figures, and outlines the chain-weighted technique now adopted in many countries for measuring real GDP. The course also explains the Theory of Income Determination, which focuses on the most important factors that determine the level of GDP.

  • OBJECTIVES

    On completion of this course, you will be able to:

    Measure GDP using three different approaches (expenditure, income, and production), and distinguish between real and nominal GDP

    Describe the factors that determine the level of GDP as outlined by the Theory of Income Determination

    Determine the effect on GDP of changes in the marginal propensity to consume, the rate of taxation, and the marginal propensity to import

  • COURSE OUTLINE

    Topic 1: Fundamentals of GDP

    What is GDP?

    Why are Intermediate Goods Excluded?

    Measuring GDP as Expenditure

    GDP Identify

    Measuring GDP as Income

    Measuring GDP as Production

    Nominal and Real GDP – Example

    Chain-weighted Real GDP

    Importance of GDP

    Criticisms of GDP

    Topic 2: The Theory of Income Determination

    Explaining the Level of GDP

    Equilibrium GDP

    How does the Economy Reach Equilibrium GDP?

    Changes in Equilibrium GDP

    The Multiplier Effect

    Topic 3: The GDP Multiplier

    What is the Multiplier?

    Why is the Multiplier >1?

    What Determines the Size of the Multiplier?

    o Marginal Propensity to Consume (MPC)

    o Average Rate of Tax on Incomes (t)

    Effect of Imports on the Multiplier

  • PREREQUISITE KNOWLEDGE

  • ESTIMATED COMPLETED TIME

    90 Minutes

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