MACRO ECONOMIC

Outline: 1. Historical aspect of economic

2. Economics agents

3. Circular flow diagram

4. Basic macro-economic indicators

1. Historical aspect of economic:

** Adam smith is the father of economics and he was called father of economic in 1976 and he wrote
a book name wealth of nation,

** in 1929 the great depression occurred and that was the biggest crises in the world and it was the
collapse of economics.

** In the year 1936 J>M>KEYNES suggested that the USA gov. should distribute money in the hand of
the people hand so that people can calm a little.

2. Economics agents:

** Agents are like a player and there are 4 types of agents.

1.Household--------two sectors

2. Firms-------------economy

3.Government-------closed economics

4.International agents--------open economics

**IF any economics does not have any international agent means that the country border is closed .
And if we have all 4 of economic then we call it open economics.

**in open eco we can import and export.

** in close eco we can’t import and export.

3. Circular flow diagram

Salary/wage

labor International agents

tax tax
Households government
firms
G-
Government G
expenditure

Goods and services

MONEY (price)
**Manager An individual who achieves goals through other people.

**Organization A consciously coordinated social unit, composed of two or more people, that functions
on a relatively continuous basis to achieve a common goal or set of goals.
**Planning A process that includes defining goals, establishing strategy, and developing plans to
coordinate activities.

**Organizing Determining what tasks are to be done, who is to do them, how the tasks are to be
grouped, who reports to whom, and where decisions are to be made.

**leading A function that includes motivating employees, directing others, selecting the most effective
communication channels, and resolving conflicts.

** Controlling Monitoring activities to ensure they are being accomplished as planned and correcting
any significant deviations

4. Basic macro-economic indicators:

 National Income
 Inflation rate
 Unemployment rate

National Income: National income means the value of goods and services produced by a country
during a financial year. Thus, it is the net result of all economic activities of any country during a
period of one year and is valued in terms of money.

Inflation rate: Inflation is the rate of increase in prices over a given period of time. Inflation is typically
a broad measure, such as the overall increase in prices or the increase in the cost of living in a country.

Unemployment rate: The unemployment rate is a useful measure of the underutilization of the labor
supply. It reflects the inability of an economy to generate employment for those persons who want to
work but are not doing so, even though they are available for employment and actively seeking work.

CHAPTER:2: Measuring GDP and standard of living

OUTLINE:
1. Definition of GDP
2. Types of GDP
3. Measuring GDP
4. GDP growth rate
5. GDP deflator
6. Components of GDP
7. Problems in measuring the GDP
Definition of GDP:
Gross Domestic product (GDP) is the market value of all final goods and services
within the country in a given period of time.
**apple----------10 taka (intermediate goods)
**oranges---------15 taka each
**1 apple juice ------35 taka (produced from apple juice)
GDP= (15*150+35=65

 Market value means product price

 Final goods mean the goods that I am consuming
 Why should we choose final goods??
=to avoid double counting
**And everywhere around the world GDP is measured only once in year.

Types of GDP:
**There are 2 types of GDP
 No minal GDP- is calculated with the current price
 Real GDP – is counted with constant price on base years
price.
2015 2016
Apple 5pc/10tk 5pc/15tk
Nominal GDP 5*10=50tk 5*15=75tk
Real GDP 5*10=50tk 5*10=50tk

Real GDP is measured with real time.

*If there is no change in production then there is no improvement in the
country.

3.Measuring GDP:
Ex-1:
2017 2018 2019
Rice 120/55tk 135/50tk 125/60tk
Vegetable 75/80tk 85/78tk 80/80tk
fruits 35/25tk 40/35tk 45/30tk