202 lecture 1
TRANSCRIPT
ECO 202Macroeconomics
How did this happen?
Prince Alwaleed bin Talal al Saud
Bill Gates
Scarcity
Choices
Make BetterChoicesChoices
Syllabus
Time Commitment
Class 3 Hours
Homework 6 HoursTotal 9
Hours9 Hours9 Hours9 Hours9 Hours
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Logon and post your name and student ID number
Moodle
GradesChatsChatsChatsChats
Think like an
EconomistEconomistEconomist
WordsNumbers
IllustrationsIllustrationsIllustrations
Economist’s Dictionary
Get the most
out of lifeout of life
RationalIncentives
MarginMarginMargin
OptimizeTradeoffs
Tradeoffs
Tradeoffs
Mileage Safety
A 2001 National Academy of Sciences study estimated that the traffic death toll attributable to past downsizing was approximately 2,000 lives per year.
Economic Models
Simplified Version of Reality
Value in Prediction
Incentives Matter
Change IncentivesChange Behavior
Incentives aremore important
than goalsthan goalsthan goals
Consequencesmatter more than
intentionsmatter more than
intentions
Unintended Consequences
Macro Micro
Science
HardSoft
Most peopleMost of the timeMost of the timeMost of the time
Economics is a Soft Science
What is Wealth?
What People Want
Get wealthy by making
others happy
Global Device
ARM HoldingsWolfson Marvel
SkyworksCSR
Linear TechnologiesNXP
National SemiconductorSharp
SamsungToshibaInfineon
BroadcomNumonyx
MicronDialog Semiconductor
Texas InstrumentsSTMicroelectronics
Silicon StorageRF Microdevices
Cirrus Logic
U.S.U.K.
GermanyKoreaJapan
TaiwanChina
Ideas occur in minds
not places
Hockey Stick
Trends
$3
Angus Maddison
IncomePer
PersonPerDay
20121AD
$100
20121AD
$3
$100
$30World
10x
Northern EuropeNorth America
33x
1820
Angus Maddison
“The Millennium–Poor Until 1820”
IncomePer
PersonPerDay
SlopePercentage Change
RelationshipsCause and Effect
AreasAreasAreasAreasAreas
X
Y
Quantity
Price
Q
P
GDPGross Domestic ProductGross Domestic ProductThe market value of all final goods and services produced in a country in
a given time
GDP Per Capita
Gross Domestic ProductGross Domestic Product
GDP Per PersonAverage GDP
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 time
Year Y/YQuarter Q/Q
Annualized: Q x 4
PercentageChangeChange
new number - old numberold number
This Year - Last Year
Last YearThis Year = 75Last Year = 60Percentage Change?
75 - 6060
1560
.25 or 25%
How do you calculate
GDP?GDP?
GDP =C = ConsumptionI = InvestmentG = GovernmentX = ExportsM = ImportsLast Year = 60Percentage Change?
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 = 25E = 30I = 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