KEYNESIAN ECONOMICS

Keynesian Economics

Keynesian Economics

Introduction

Macroeconomic level is concerned either with the economy in general or with the basic units of units - such as government, household and business sectors - which Make to the economy. The collection is a set of specific economic units, which are treated as if they were one unit. Macroeconomics reviews of all the economy in general, outlining the main units that build the economy. (Blaug, 1986) That is why words such as general, the total are always used in macroeconomics. That is part of the economy, coupled with the economy as a whole, with such large aggregates as the household, business and government sectors and is for the EU. So, the basic indicators of macro-economy are: gross national product (GNP), the price level, interest Rate and employment.

Gross National Product

There is general agreement that the best available indicator of economic health is its annual production of goods and services, or so-called aggregate output. This is called the GNP and is defined as the total market value of all final goods and services produced in the EU for one year. Determination of IRR is very clear and substantive comments. First, GDP measures the market value of annual production. Second, GNP is a monetary measure. To measure accurately the weekend, we must take into account all the goods and services only once. That is why GNP increase includes only final goods and services and does not include operations with intermediate goods and services. Actually GNP can be determined either by summing up all that is spent on the purchase of the total production this year, or by summing up all increases derived from the production this year. Formula GNP can be defined as follows:

GDP = C + Ig + G + Xn

where C stands for personal consumption expenditures (costs households for consumer durables: cars, houses, VCRs, and so on; nondurable consumer goods: milk, bread, beer, toothpaste, clothing, etc.; on consumer spending services of lawyers, doctors, hairdressers), Ig of gross private domestic investment, G government purchases of goods and services, and Xn represents net exports, is the amount by which foreign spending on U.S. goods and services exceeding U.S. spending on foreign goods and Services . All of these cost categories shown above increase all possible types of expenditures. Added together, they reflect the GDP of the year.

Price same basket in the base year

The federal government expects to price indices OS a few different collections (or market basket) of goods and services. Top know these indices consumer price index (CPI), which measures prices of a fixed market basket of 300 consumer goods and services purchased by typical urban consumers. Price index for GDP or GNP deflator, however, is more useful than the CPI to measure the general price level. GDP deflator also increase includes price of investment goods, goods and services purchased by the government, and G & S, which are part of world trade.

Aggregate Demand and Aggregate Supply

Aggregate demand - a timetable that clearly represented a curve that shows the ...