GDP: What to count?

Here's a video that elaborates a little on what is and is not counted in GDP.

 

Circular Flow of Income and Expenditures

If you are struggling with the circular flow diagram, take a look at this video. It gets to the point. But, be careful - it's a little too simple. Clearly, the economy has more than one person. Also, this model does not allow for leakages and injections, which are crucial for understanding things like growth and determination of the level of employment.

Basics of Macro

Macro: The Basics

In economics, there are several ways to look at the economy. The approaches we begin with in principles courses are microeconomics and macroeconomics. As we have done over the last few weeks, we have looked at the micro questions. How might choices be made given a limited budget, or how might a firm respond to a price change. We looked at how the forces of supply and demand work to bring about an equilibrium price in a single market. This takes a worm’s eye view of the economy. We are looking at very detailed, specific parts of the economy. The individual consumer or the individual firm are the objects of analysis in microeconomics.

In macroeconomics we take a bird’s eye view. In a way, we are looking down on the economy from space and trying to examine how the interactions of all those individuals living and working together, result in measurable economic phenomena as a whole.

So what phenomena are we looking for here?