ECO 102Macroeconomics

Why are all taxi drivers in Riyadhfrom some place else?

GDP Per

Capita

Saudi Arabia $25,000

India $1,500Pakistan $1,261

Bangladesh $800

16.7 times more 19.8 times more 31.2 times more

Damman No. 7March 3,1938

Dhahran

Standard OilRockefeller

World’s most valuable company

Energy Density MJ/kg

24 44 55 80,620,000

Why are some countries rich

and others poor?

Energy?

Saudi Economics

Syllabus

Time Commitment

Class 3 Hours

Homework 6 HoursTotal 9

Hours

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Macro Micro

Science

HardSoft

Most people

Most of the time

Economics is a Soft Science

What is Wealth?

What People Want

Get wealthy by making

others happy

Ideas occur in minds

not places

Hockey Stick Trends

$3

Angus Maddison

Income Per

Person Per Day

20121 AD

$100

20121 AD

$3

$100

$30World 10x

Northern Europe North America

33x

1820

Angus Maddison

“The Millennium–Poor Until 1820”

Income Per

Person Per Day

GDPGross Domestic Product

The market value of all final goods and services produced in a country in

a given time

GDPHow much stuff a

country makes

GDP Per CapitaGDP Per Person

Average GDP

GDP $750 billion

Population 30 million

GDP Per Capita $25,000

Market ValueWhat something

would sell for

Market ValueOne Apple

plusOne Orange

= Three Riyals

AllEverything except...

Stuff you don’t sell

FinalIntermediate

Final

Final

Intermediate

Goods and Services

Goods

Services

ProducedNew Stuff

Does not include the sale of used goods

Within a Country

Only production within Saudi

Arabia

In a given period of timeYear Y/Y

Quarter Q/QAnnualized: Q x 4

PercentageChange

new number - old numberold number

This Year - Last YearLast Year

This Year = 75Last Year = 60Percentage Change?

75 - 6060

1560

.25 or 25%

How do you calculate

GDP?

GDP =C = ConsumptionI = InvestmentG = GovernmentX = ExportsM = Imports

GDP =C + I + G + (X - M)

ConsumptionSpending by

households on goods and services, except new housing

InvestmentSpending on capital

equipment, inventories, and structures, including new

housing

GovernmentSpending on goods and services from

local, state, and federal governments.

Net ExportsExports minus

imports

Net ExportsForeigners buying

exports minus domestic residents

buying foreign goods

What is GDP?C = 105I = 40G = 25X = 30M = 20

What is GDP?C = 105I = 40G = 25E = 30I = 20

GDP= C + I + G + (X - M)= 105 + 40 + 25 +(30-20)= 105 + 40 + 25 +10= 180