Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
GDP ± Gross Domestic
Product
! A measure of the total flow of goods and
services produced by the economy over a
specified time period. It is obtained by
valuing outputs of goods and services at
market prices and then aggregating. Note
that all intermediate goods are excluded and
only goods used for final consumption or
investment goods (capital) or changes in
stock are included. This is because the
values of intermediate goods are implicitly
included in the prices of final goods.
GDP ± Gross Domestic
Product
(a)
Final goods and services
(bread, computers, haircuts, etc.)
Purchasers
(households, Producers
governments«) (businesses)
(b)
Productive services
(labor, land, etc.)
$
Wages, rents, profit, etc.
Value added accounting
*
GDP Deflator
`
| `
( '
*
`
&'
&'))
`
)) +
overnment
Taxes
ational Income
I
onsumption
È1
È2
È3
Ò1 Ò2 Ò3 Ò
Philips curve analysis
Ò1 Ò2 Ò3 Ò
Trade Cycles
! WC ]itchell ± Business cycles are a
species of fluctuations in the economic
activities of organised communities. The
word ³Business´ implies that these
fluctuations are purely commercial and
³Cycle´ implies that these fluctuations occur
regularly.
! Keynes ± A trade cycle is composed of
periods of good trade characterised by
rising prices and low unemployment
percentage, alternating with periods of bad
trade characterised by falling prices and
high unemployment percentage.
Phases or stages of a trade
cycle
! In monetary jargon, the five phases of a trade
cycle are identified as depression, reflation, full
employment, disinflation and deflation.
a. Depression ± Level of economic activity and price
levels are very low. Profits cease to exist with
mounting losses and unemployment. Interest,
wages and profits are low. A period of great
suffering, low income, heavy unemployment and
utter pessimism.
b. eflation ± Depression gives place to recovery
and revival of business activity. Demand for goods
and services start rising as also the wages,
interest and profits. Pessimism gives way to
optimism. Employment and national income
increase
Phases or stages of a trade
cycle
c. Full employment ± The recovery process culminates in the
economy reaching full employment with optimum level of
economic activity. There is all round economic stability in
output, wages, prices and income.
d. Boom or inflation ± Beyond full employment, investments will
put pressure on men and material. Speculative investments
create overcapacity for production and results in over
employment of resources. Bank credit increases
significantly. However, bottlenecks start showing up.
e. ecession ± Over investment and over optimism during the
boom period do not yield desired results because of full
employment. Generally, a company or a bank will burst and
puncture over optimism. During this phase, business
expansion and credit are sharply curtailed. Unemployment
and hoarding are on the incline. Stock markets crash and
there is general economic gloom.
Phases or stages of a trade cycle
|