DLI 100 LEVEL ZOOM

CLASS_2

COURSE: ECN 141- PRINCIPLES OF MACROECONOMICS

DATE: 06/03/2021
TIME: 3PM
Introduction to the Study of
Macroeconomics
• Macroeconomics may be defined as that branch of economics which
studies the behavior of all units in an economy.
• In other words, macroeconomics studies the aggregates, such as the
aggregate level of economic activity including output, employment,
general price level and money.
• Goals of Macroeconomics
• Price stability
• Full employment
• Economic growth
• Balanced development
National Income Accounting
• National income is the basic concept in macroeconomics. It refers to
the monetary value of all the goods and services produced in a
country during an accounting period, usually a year.
• Circular flow of income is a model that indicates the movement of
money throughout an economy, for instance, between businesses and
individuals.
 Concepts in National income Accounting

• Personal Income
• Disposable Income – Y-T
• Gross domestic product (GDP)
• Gross national product (GNP)
• Nominal and Real GNP
• Net national product- NNP = GNP – depreciation
• Per capita income –NI/population
Measurement of National Income

Basically, there are three approaches or methods of national income

accounting. They are:
1. The income approach
2. The output approach
3. The expenditure approach
Determinants of National Income

i. Stock of productive input available in terms of quality as well as

quantity.
ii. State of technical knowledge.
iii. Extent of political and social stability.
iv. Level of infrastructure.
v. Level of economic stability
Reasons for Measuring National Income

i. National income is used for economic planning.

ii. National income is used to measure economic progress.
iii. National income is used to measure the standard of living of the
people.
iv. National income is used for international comparison.
v. National income can be used to attract foreign aids and technical
assistance.
vi. National income influences foreign investment.
Problems of National Income Accounting

• Double counting
• Illegal activities
• Addition difficulty
• Imperfect or distorted information