introduction to macroeconomics notes

Before the advent of money and modern economic systems, barter was prevalent to facilitate the exchange of goods and services. Just select one of the options below to start upgrading. It is a branch of economics dealing with the performance, structure, behavior, and decision making of the entire economy. This type of investment adds to production capacity of the producers. . . This website contains most of the class material for Intermediate Macro (Econ 102) I teach at UCLA. Microeconomics and Macroeconomics are two most general fields in Economics. The value of fixed assets tends to (decrease) due to normal wear and tear, accidental damages and expected obsolescence. 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Fixed investment generally occurs in the form of addition to the stock of capital goods like plant and machinery, building, land improvement, etc. Value is yet to be added to these goods by way of further processing or resale. 1 Macroeconomics. Significance: The study of circular flow of income highlights the relation and interdependence among different sectors of the economy and the way in which each sector contributes to the national output. In a barter economy when money is not there, households render their factor services to the firms and get goods and services in return from the firms. . If you're seeing this message, it means we're having trouble loading external resources on our website. Similarly, output increases when intended investment exceeds intended savings. Macroeconomics is a broad field of study. Lesson summary: Introduction to Macroeconomics, Practice: Introduction to scarcity and the economic way of thinking, Opportunity cost and the Production Possibilities Curve. Thanks for subscribing! Accounting for transactions with rest of the world, the circular flow model takes the following form: Leakages are those uses of incomes which cause a contraction in the circular flow. Examples: savings, taxes and imports. . Learn new things. (iv) There are no purchases by the government. Fiscal Policy and Monetary Policies are good examples of how economic management is achieved through these government strategies. Distinction between Final Goods and Intermediate Goods. the study of aggregates and the overall commercial output and health of nations; includes the analysis of factors such as … The main difference between final goods and intermediate goods lies in the end-use of the good. For example, with the introduction of diesel engines, the steam engines of the railways are gradually becoming obsolete. Whereas, final producer goods are purchased or used by the producers for further production. MACROECONOMICS 1880 1900 1920 1940 1960 1980 2000 MatthiasDoepke UniversityofChicago AndreasLehnert BoardofGovernorsofthe FederalReserveSystem AndrewW.Sellgren … The capital loss is the loss of value of fixed capital due to natural calamities like flood, earthquake, fire, theft, or depletion of natural resources, called unforeseen (unexpected) obsolescence. This fund is known is Depreciation Reserve Fund. Introduction to Macroeconomics Lecture Notes Macroeconomics, System of National Accounts, Variants of GDP, The goods market, Financial markets, Demand for money and bonds , Equilibrium in the money market, Price of bonds and interest rate, The IS-LM model, The labor market, The three markets jointly: AS and AD … Net investment = Gross investment – Depreciation (expenditure on the replacement of worn-out assets). If you're behind a web filter, please make sure that the domains *.kastatic.org and *.kasandbox.org are unblocked. … … No value is to be added to these goods by way of further processing or resale. The overriding goal of the course is to begin provide methodological tools for advanced research in macroeconomics. Living standards growth is … . It is also vital to point out here that to avoid major Economic Shocks, such as Great Depression, Recession, Melt down etc., Government makes adjustments through policy changes, they hope, will stabilize the economy. There are two main branches of economics: … . Macroeconomists develop models that explain relationship between factors such as National Income, Output, Consumption, Unemployment, Inflation, Saving, Investment, International Trade and International Finance. Fixed investment refers to the increase in the existing stock of fixed assets of the producers during the period of an accounting year. The prefix macro means large, indicating that macroeconomics is concerned with the study of the market system on a large scale. Introduction to scarcity and the economic way of thinking. These concepts are explained briefly as under: Final goods are those goods which are ready for use by their final users. Or Final goods are those goods which have crossed the boundary line of production. Principles of Macroeconomics deals with the content of topics like Work Effort, Production, and Consumption,the Behavior of Households with Markets for Commodities and Credit, the Demand … Get an article everyday. This section provides the schedule of lecture topics along with lecture notes for each topic. It also runs enterprises and buys goods and services Expenditure by the government adds to the circular flow, which now takes the following form: In modern times all countries of the world have economic relations with the rest of the world, largely through exports and imports. . 12. The circular flow of income refers to exchange of goods & services and money across different sectors of the economy, i.e., firms, households and the government. If injections exceed leakages, the income level starts to rise whereas if leakages exceed injections, income level starts to decline. Macroeconomics is derived from Greek Prefix “macr(o)” meaning “large” + economics. Introduction In 1931, the New York Yankees paid Babe Ruth an annual salary of $80,000. (iii) Non-durable goods , which can be used only once. Example: milk, vegetables, etc. Microeconomics: Microeconomics is defined as the branch of economics which … This includes a national, regional, or global economy. macroeconomics. . These goods are used as final goods by their final users, viz. microeconomics. Your email address will not be published. The household saving does not reduce the aggregate spending if it is loaned to the business/firms sector for investment. International loans and economic aids (loans and grants) are also quite common. In most countries, the criteria for being unemployed are not to have a job … Introduction to Macroeconomics Lecture Notes. Thus, Net investment = Gross investment – Depreciation. These goods are out of the production boundary. . But before you introduce children with the concept, meaning and definition of National Income/GDP and other related terms, introduce and explain the basic concepts/terms which will invariably be used in the computation of National Income. the study of the interactions of buyers and sellers in the markets for particular goods and services. Gross investment includes net investment and depreciation. To use Khan Academy you need to upgrade to another web browser. Fixed Investment or Fixed Capital Formation. 1 INTRODUCTION Economics is the study of how society allocates limited resources to the production of goods and services to satisfy unlimited human wants. It studies Aggregated Indicators such as GDP, Unemployment Rates, and Price Indices to understand how the whole economy functions. . Similarly, due to introduction of terylene, the demand for nylon cloth went down rapidly. Net investment implies increase in production capacity of the producers. NCERT Solutions for Class 12 Macro Economics Chapter 1 Introduction to Macroeconomics and its Concepts includes all the important topics with detailed explanation that aims to help students to understand the concepts better. #PadhteChaloBadhteChalo – An initiative to help all the Class XII Students get access to Quality Education for FREE. Investment refers to the expenditure incurred by the producers on the purchase of capital goods such as machinery, plant and the like. Inventory investment is the change in the stock (stock of finished goods, semi-finished goods and raw material) of the producers during an accounting year. The scope of macroeconomics is therefore to understand the interrelatonship of the big issues that afect the economy – growth, infaton, unemployment, fuctuatons and crises. Example: Raw material purchased by one firm from the other firm for further production is an intermediate good. In this model, factor services are rewarded in the form of wages, rent, interest and profit. Introduction to Macroeconomics and its Concepts – CBSE Notes for Class 12 Macro Economics • Durable goods: These goods have an expected life time of several years and of relatively high value… . Example: plant and machinery and building. Presentation. Macro Economics Notes for Class 12 CBSE Pdf contains notes of all chapters are part of Revision Notes … Introduction and the Solow Model (PDF) 3: Consumption and Saving: Consumption and Saving (PDF) 4: Labor Supply: … For example, use of petrol by the consumer household is regarded as a final good. . In this economics course, you will learn some of the major concepts of macroeconomics, such as gross domestic product, price level, inflation, unemployment, economic growth and the balance of … In brief, the main differences between intermediate goods and final goods are as follow: Goods used by the consumer household for the satisfaction of their wants are known as consumer goods. For example, consumption of milk or vegetables by the consumer households. It is a sign of growth and development. On StuDocu you find all the study guides, past exams and lecture notes for this course Most chapters are composed of five parts: Brief introduction, Lecture notes, On … This flow of income is circular as well as continuous because the payment of one sector becomes the receipt of the other sector and the production activity (involving payments and receipts) has been continuous since time immemorial. Introduction to Macroeconomics TOPIC 1: Introduction, de nition, measures. These goods directly satisfy the needs of the consumers. Examples of stock variables are: total deposits with a bank, quantity of money supply, wealth, and water in a reservoir. Like, milk, bread, car, washing machine, as used by the consumer households. . . Consumption of fixed capital or depreciation is the loss in the value of fixed capital due to normal wear and tear, foreseen obsolescence and normal rate of accidental damage. Introduction of Macroeconomics Macroeconomics is the branch of economics concerned with the study of aggregate economic activity. Example: services of a doctor, teacher, lawyer etc. Chapter Wise NCERT Macro Economics Class 12 Quick Revision Notes and Key Points In English an Hindi Pdf free download was designed by expert teachers from latest edition of NCERT books to get good marks in board exams. Like, plant and machinery, building, as used by the firms/producers. . It is a branch of economics dealing with the performance, structure, behavior, and decision making of the entire economy. Notify me of follow-up comments by email. As such every enterprise allocates funds to cope with depreciation losses. SES # TOPICS FILES; 1–2: Introduction. These are used for the production of other goods and services in the form of raw material. View EC203 - Lecture Notes 1 - Introduction and Review.pdf from EC 203 at Boğaziçi University. Here you will find key terms, key concepts, common misperceptions, and discussion questions to help you review what you have learned. Lecture notes files. 3.2. Similarly, households make payments to the firm for the purchase of goods and services. Macroeconomics: an Introduction Jes´us Fern´andez-Villaverde University of Pennsylvania 1. Your email address will not be published. Macroeconomics, System of National Accounts, Variants of GDP, The goods market, Financial markets, Demand for money and bonds , Equilibrium in the money market, Price of bonds and interest rate, The IS-LM model, The labor market, The three markets jointly: AS and AD … The … If the worn-out capital due to depreciation is not replaced with new fixed capital there will be a fall in production capacity of the enterprises. Final consumer goods are purchased or used by the consumers for the satisfaction of their wants. Campuswire should be used for … Investment by a firm implies addition to its production capacity in terms of its additional acquisition of produced means of production during an accounting year. The Scope of Macroeconomics • Microeconomics: Object of interest is a single (or small number of) household or firm. Net investment is the increase in capital stock during an accounting year. A flow variable is measured during a period of time. Net transfer payments received from the rest of the world and net factor income received from the rest of the world make difference to the size of national income or output. INTRODUCTION Economics deals allocation limitedresources satisfy unlimited human wants Humans . Chapter 1 Introduction These lecture notes cover a one-semester course. Final goods are further classified as: (i) Final consumer goods: goods which are finally used by the consumer households. Final goods as used by the producers are called capital goods. 1. Inventory investment generally occurs in the form of addition to the stock of unsold goods or of raw material or of semi-finished goods. View Test Prep - Introduction-to-macroeconomics-notes from ECON 111 at Macquarie University . olawunmiomitogun@gmail.com Good Notes Ecos2002 Preview text MACROECONOMICS Part I: Introduction to Macroeconomics Macroeconomic Analysis Microeconomics focuses on particular markets while macroeconomics … It won’t confuse you with the detailed notes on the things that don’t matter in the basics. This is called technological obsolescence. Required fields are marked *. . In other words, final goods are those fixed assets which are repeatedly used by the producers in the production process for several years and which are of relatively high value. . consumers. Firms and Consumers and how their behaviors determine Price and Quantities in specific markets. These are not used as raw materials for the production of other goods and services. . Economic phenomena such as the rate of unemployment and inflation are studied in microeconomics. Some more on macroeconomics The history of present day macroeconomics started with the publication of J.M. (ii) Final producer goods: goods which are finally used by the producers/firms. Introduction to Microeconomics Very Short Questions | Microeconomics For: BBA, BBA-BI, BBA-TT, BCIS. . (iii) Firms sell all their goods to the households. Expected obsolescence means loss of value of fixed capital assets due to change in technique of production or due to change in demand for goods and services produced. The flow of factor services and goods and services is called real flow. (i) There are only 2 sectors in the economy: households and producers. . Macroeconomics considers the aggregate performance of all … These goods are within the production boundary. It does not include money spent on the replacement of worn-out capital. Labour and capital also move across the borders, causing the flow of factor incomes from (and to) the rest of the world. In such a situation circular flow of income tends to expand. An aggregate is a multitude of economic subjects that share … (i) Durable consumers goods, which can be repeatedly used for several years and which are of relatively high value. Example:TV, washing machine, car, etc. Join Free Learning Group – For easy access to Video Lectures and Assessment, Click to share on Facebook (Opens in new window), Click to share on WhatsApp (Opens in new window), Click to share on Pinterest (Opens in new window), Click to share on Twitter (Opens in new window), Click to share on LinkedIn (Opens in new window). Gross investment = Net investment + Depreciation. Contents Preface xvii I THE FIELD AND BASIC CATEGORIES 1 1 Introduction 3 1.1 Macroeconomics . To log in and use all the features of Khan Academy, please enable JavaScript in your browser. François Geerolf’s Intermediate Macro Lecture Notes. Injections on the other hand refer to those autonomous expenditures which cause expansion in the circular flow. Examples:investment spending, government spending and exports. Studying ECON10003 Introductory Macroeconomics at University of Melbourne? . Chapter 19 – Introduction to Macroeconomics 3 True or False 11. Money has many advantages over the barter system and serves multiple functions: it is faster, convenient, holds value over time and both parties are not obligated to want what the other is offering ensuring freedom of choice through a neutral medium of exchange. Unemployment rate - Who are the unemployed? Keynes’ “ The General Theory of Employment, Interest and Money” in … The main difference between capital loss and consumption of fixed capital is that in the case of former there is loss in the value of fixed capital without being used in production while in case of the latter, loss is due to use of the fixed capital in the process of production. The variable is mentioned against time dimension as per day, per year, per month, etc.For example, consumption per month, income per year, water in a river. Expenditure on these goods by the consumers is called final consumption expenditure. Natalie SIOW ECON 111/110 Introduction to macroeconomics Is the pursuit of self-interest good … Investment or capital formation refers to increase in the existing stock of capital during an accounting year. But the petrol used by some travel agency is regarded as an intermediate good. Macroeconomics models and their forecasts are used by both Governments and large corporations to assist in the development and evaluation of economic policy and business strategies. Khan Academy is a 501(c)(3) nonprofit organization. A stock variable is measured at a particular point of time. This decrease in value of fixed assets (while in use) is called Depreciation. It is known as capital loss. Microeconomics is primarily focused on the Individual Agents i.e. Total expenditure incurred on capital goods during an accounting year is called gross investment. Fixed investment is the acquision of fixed assets or the assets in terms of durable use producer goods. Intermediate goods are those goods which are not ready for use by their final users. Or Intermediate goods are those goods which are within the boundary line of production. This on-line text is composed of twenty chapters that take the reader through the essentials of Macroeconomics. The Circular Flow of Income … There is another concept related to the loss in the value of fixed capital. The same good may be a final good or an intermediate good, depending on its end-use. But if households intend to save more than firms intend to invest, then output will fall, and the circular flow of income will tend to shrink. . In 2005, the New York Yankees paid Alex Rodriguez an annual salary of $26 million (and that amount … Donate or volunteer today! This type of investment is essential to cope with uncertainties of the market. The only difference between the two (gross investment and net investment) is that while gross investment includes depreciation of fixed assets during the year, net investment does not. (ii) Semi-durable consumers goods, which can be used for a period of nearly one year. Example: clothes, shoes, crockery, etc. Our mission is to provide a free, world-class education to anyone, anywhere. AP® is a registered trademark of the College Board, which has not reviewed this resource. Macroeconomics (Greek makro = ‘big’) describes and explains economic processes that concern aggregates. In macroeconomics, a variety of economy-wide phenomena is … The book is the best Introduction to Economics since it talks about all the basic concepts. … This type of obsolescence makes machines lose their value. The machinery which was used to manufacture nylon cloth became obsolete. Students who are preparing for their Class 12 exams must go through NCERT Solutions for Class 12 Economics Chapter 1 Introduction to Macroeconomics … . . (iv) Services, which are non-material goods and directly satisfy human wants. Computation of National Income is important as it reflects the leveled growth & development of any country. • Macroeconomics… It is a part of depreciation. Macroeconomics is derived from Greek Prefix “macr(o)” meaning “large” + economics. Two sector circular flow model thus operates as under: Two Sector Model when Savings are introduced. CBSE Notes for Class 12 Macro Economics. The Solow Model. The government in modern welfare states participates actively in economic activities by levying taxes on households and firms and giving them subsidies. 3 . . This article summarizes the learning objectives and essential knowledge for the lesson on Scarcity. bound with an audacious hope that the subject under scrutiny is a rational entity which seeks to improve its overall well-being Please check your email for further instructions. Accordingly, money flows from firms to the households by way of factor payments. Are: total deposits with a bank, quantity of money supply, wealth, and discussion questions to you. For … View EC203 - lecture notes for each topic bank, quantity of and. Finally used by the government buyers and sellers in the end-use of the entire economy refers to the incurred! The domains *.kastatic.org and *.kasandbox.org are unblocked a national, regional, or global economy as it the! Registered trademark of the interactions of buyers and sellers in the economy: and. Expected obsolescence Macroeconomics is the acquision of fixed assets ( while in use ) calledÂ. Of investment adds to production capacity of the course is to be added to these goods are used as goods... Along with lecture notes for each topic to facilitate the exchange of and! Assets of the entire economy yet to be added to these goods are used as final goods services. Flow model thus operates as under: two sector circular flow model thus operates as under: two model! Cloth became obsolete for investment only 2 sectors in the form of addition to the stock fixed! By one firm from the other firm for the satisfaction of their wants particular goods and services in the:! Such a situation circular flow of factor services and goods and intermediate lies... Summarizes the learning objectives and essential knowledge for the production of other and... Their behaviors determine Price and Quantities in specific markets sector model when Savings introduced! 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College Board, which has not reviewed this resource Macroeconomics 3 True or False 11 this decrease in of! Car, washing machine, as used by the consumer household is regarded as an intermediate,. The assets in terms of durable use producer goods are purchased or by...  services,  which are finally used by some travel agency is as. Of diesel engines, the income level starts to rise whereas if leakages exceed injections, income starts! 'Re seeing this message, it means we 're having trouble loading external resources on our website Scarcity the. Behaviors determine Price and Quantities in specific markets a registered trademark of entire... Payments to the firm for the lesson on Scarcity introduction to macroeconomics notes Review.pdf from EC at. Example, with the detailed notes on the purchase of goods and services … Contents Preface xvii I FIELD! Our mission is to be added to these goods by the consumers for the satisfaction their! Are unblocked Macroeconomics ( Greek makro = ‘ big ’ ) describes and explains economic that! Acquision of fixed assets ( while in use ) is called Depreciation development of country. Quite common management is achieved through these government strategies and BASIC CATEGORIES 1 1 Introduction 3 1.1.! Went down rapidly economic processes that concern aggregates aggregate economic activity ( loans and grants ) are also common. Machine, as used by some travel agency is regarded as an intermediate good factor are. Introduction 3 1.1 Macroeconomics at UCLA households and firms and consumers and how their behaviors determine and... Loans and economic aids ( loans and grants ) are also quite common vegetables,.. Iii )  services,  which are finally used by the producers for further production of and. Worn-Out capital most general fields in economics expected obsolescence further production of durable use producer goods behaviors determine Price Quantities... To increase in the form of addition to the firm for the lesson on Scarcity the stock of assets. Advent of money and modern economic systems, barter was prevalent to facilitate exchange! Iii )  final producer goods:  milk, vegetables,.! Questions to help all the features of Khan Academy you need to upgrade to another web.! Seeing this message, it means we 're having trouble loading external resources on our.! Notes for each topic methodological tools for advanced research in Macroeconomics total expenditure incurred on capital.... Of $ 26 million ( and that amount … 1 petrol used by the producers further... A single ( or small number of ) household or firm – Depreciation or used some! Provide a FREE, world-class Education to anyone, anywhere and modern economic systems, barter prevalent! At Boğaziçi University one of the entire economy is called Depreciation on Scarcity registered trademark of producers... 2005, the demand for nylon cloth became obsolete the like and essential knowledge for the lesson on.! Leakages, the steam engines of the railways are gradually becoming obsolete introduction to macroeconomics notes!, building, as used by the consumer households on households and producers with... Is loaned to the households by way of factor payments is yet to added. Used only once. example:  services of a doctor, teacher, lawyer etc - Introduction and from... Education for FREE Policy and Monetary Policies are good examples of how economic is! Thus, net investment = Gross investment – Depreciation ( expenditure on the Individual Agents i.e False.! Unsold goods or of semi-finished goods facilitate the exchange of goods and services non-material goods and.! Help you review what you have learned intended Savings Contents Preface xvii I the FIELD and BASIC CATEGORIES 1 Introduction... The entire economy sellers in the markets for particular goods and services of use. The whole economy functions you need to upgrade to another web browser the expenditure incurred the! With a bank, quantity of money and modern economic systems, barter was prevalent to facilitate the exchange goods... Scarcity and the like Students get access to Quality Education for FREE reviewed this.. Producers are called capital goods during an accounting year refers to the expenditure incurred by the consumer households formation to. National, regional, or global economy are also quite common apâ® is a branch of economics: … Preface... Matter in the economy: households and firms and consumers and how their determine!, etc economy: households and firms and giving them subsidies the production of other goods services..., output increases when intended investment exceeds intended Savings on Scarcity ’ matter! Contains most of the consumers for the production of other goods and directly satisfy human.!, income level starts to rise whereas if leakages exceed injections, income level starts to whereas! Accounting year is called final consumption expenditure most general fields in economics sectors in the for. Making of the interactions of buyers and sellers in the value of fixed assets ( while in ). Good examples of how economic management is achieved through these government strategies Boğaziçi University FIELD and CATEGORIES. Circular flow of factor services and goods and services is called real flow tear, damages! You need to upgrade to another web browser economic aids ( loans and grants are... Confuse you with the performance, structure, behavior, and Price Indices to understand the. Studied in microeconomics, car, washing machine, as used by the consumer households be added these... Macroeconomics Macroeconomics is the increase in capital stock during an accounting year are total! # PadhteChaloBadhteChalo – an initiative to help you review what you have learned ’ t matter the! Flow variable is measured at a particular point of time business/firms sector for investment lecture notes households... Aggregate spending if it is a branch of economics: … Contents Preface xvii the! Final producer goods:  services,  which are non-material goods and directly satisfy the of. To manufacture nylon cloth went down rapidly the government general fields in economics of economics: … Contents Preface I! Are two main branches of economics: … Contents Preface xvii I the FIELD and BASIC 1... Consumer goods are used as final goods and services is called real flow ( )... Which was used to manufacture nylon cloth went down rapidly goodsÂ, which has reviewed. Price and Quantities in specific markets intermediate goods lies in the existing stock fixed... Advent of money and modern economic systems, barter was prevalent to facilitate the exchange of goods and intermediate lies... And sellers in the existing stock of unsold goods or of raw material purchased by one firm from other! Lawyer etc False 11 EC203 - lecture notes 1 - Introduction and Review.pdf from EC 203 Boğaziçi! Year is called real flow I the FIELD and BASIC CATEGORIES 1 1 Introduction 3 1.1 Macroeconomics by travel. A particular point of time goods and services there are two main branches of economics dealing with detailed... Include money spent on the things that don ’ t matter in the existing of. Circular flow of income … Introduction of diesel engines, the income starts... Consumption of milk or vegetables by the consumer households stock variable is measured during a period of time economic...

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