Macroeconomics

Table of Contents

1. Topic pack - Macroeconomics - introduction
2. 2.1 The level of overall economic activity (notes)
   1. Overall economic activity - introduction
   2. The circular flow of income model (1)
   3. Circular flow - two sector closed
   4. Circular flow - two sector open
   5. Circular flow - three sector open
   6. Circular flow - government
   7. The circular flow of income model (2)
   8. Circular flow - a summary
   9. Some mathematics
   10. Measures of economic activity
   11. Examining the three methods of calculating national income
   12. What is GDP? (video)
   13. Different national income measures
   14. Real v money data
   15. Current and constant prices
   16. Using index numbers
   17. Total and per capita
   18. Case study - rapid economic growth
   19. Using national income data
   20. Purchasing power of GDP
   21. Alternative measures of GDP
   22. Case Study
   23. Short term fluctuations and long term trends
   24. The business cycle in history
3. 2.1 The level of overall economic activity (questions)
4. Section 2.2 Aggregate demand and supply (notes)
5. Section 2.2 Aggregate demand and supply (simulations and activities)
6. 2.2 Aggregate Demand and Aggregate Supply (questions)
7. 2.3 Macroeconomic objectives (notes)
8. Low Unemployment
9. 2.3 Macroeconomic objectives (questions)
10. 2.4 Fiscal policy (notes)
11. 2.4 Fiscal policy (questions)
12. 2.5 Monetary policy (notes)
13. 2.5 Monetary Policy (questions)
14. Section 2.6 Supply-side policies (notes)
15. 2.6 Supply-side policies (questions)
16. Print View

Using national income data

Living standards and welfare are considered to be key concepts in economic development.

In a previous section we noted that using national income data to measure living standards, and to measure how these change over time, is very difficult.

Similarly, using national income data to compare the living standards in different countries can be problematic. In particular, governments have problems:

1. measuring living standards of the population
2. measuring how living standards change over time
3. comparing living standards between different countries
   

Can you remember the issues associated with using national income data such as GDP to measure living standards?

• The unofficial, shadow or informal economy - in which the output is not declared.
• Non-marketed goods and services - some transactions do not involve money changing hands.
• Government spending -some government expenditure goes to producing public goods, for example defense, which are not sold.

Can you remember the issues associated with using national income data such as GDP to measure how living standards change over time?

• Population numbers change
• income flows to and from abroad change
• Prices change which gives a false view of GDP changing
  
• It does not take account how income is distributed