Macroeconomics
Chapter 8: The level of overall economic activity
PPT here
Chapter 9: Aggregate demand and aggregate supply
PPT here
Chapter 10: Macroeconomic objectives I: Low unemployment, low and stable rate of inflation
PPT here
PPP
Good Articles
http://www.straitstimes.com/opinion/who-has-the-worlds-no-1-economy-not-the-us
Green GDP
Green GDP = Real GDP - Value of environmental degradation. Green GDP takes the concept of sustainability and the impact of economic growth on the environment into account taking away the value of environmental degradation. The value of environmental degradation can be understood as the cost which is incurred to generate the real GDP for that year. Take for example that real GDP is US 100 billion and value of environmental degradation is USD 90 billion, Green GDP would be USD 10 billion.
What does this USD 10 billion REALLY mean though as the real level of output is USD 100 billion and that is genuinely produced? At one level, it means that the country has actually produced relatively little because the creation of the UDS 100 billion real GDP was actually weighed down by the reduction of USD 90 billion worth of environmental resources. Just accounting for real GDP is underestimating the true value of output. On another level, it means that the Real GDP of USD 100 billion is sustainable and not a good indicator of future output because the current levels of output was achieved at the expense of environmental degradation. Furthermore, it is also a reflection of standard of living as people's real income would not be as high as originally thought.
There is an implicit assumption that economic growth depends on natural resources. For this reason, for countries that do not rely on the environment to generate growth e.g. countries with high tech sectors, can theoretically have high levels of environmental degradation (for reasons not related to economic production), have a low Green GDP but that measure would not be meaningful. For example, Country A has a Real GDP of USD 200 billion and the main form of output is selling high tech equipment. Because of a huge fire, the entire forrest was burnt down and the value of environmental degradation is USD 180 billion. Green GDP is 200-180 = USD 20 billion. What is the an accurate measure of economic OUTPUT in this case? In this theoretical example, USD 200 billion is the correct answer as the environment has nothing to do with economic output. However, if one was to look at standard of living then the value of USD 20 billion will be more meaningful as the quality of environment affects the quality of life directly. If you guys have not already realised, this is the high level evaluation type comments that level 7 students would make.
This all sounds quite complicated but the main thing is to critically UNDERSTAND what the measure is trying to express. To what extent does it convey these meanings e.g. impact of output on the environment accurately? It is very important that you understand the underlying meanings accurately because the real world likes to throw numbers around to advocate their own agendas. This could be quite an interesting example for TOK essays...uhm....
Chapter 8: The level of overall economic activity
PPT here
Chapter 9: Aggregate demand and aggregate supply
PPT here
Chapter 10: Macroeconomic objectives I: Low unemployment, low and stable rate of inflation
PPT here
PPP
Good Articles
http://www.straitstimes.com/opinion/who-has-the-worlds-no-1-economy-not-the-us
Green GDP
Green GDP = Real GDP - Value of environmental degradation. Green GDP takes the concept of sustainability and the impact of economic growth on the environment into account taking away the value of environmental degradation. The value of environmental degradation can be understood as the cost which is incurred to generate the real GDP for that year. Take for example that real GDP is US 100 billion and value of environmental degradation is USD 90 billion, Green GDP would be USD 10 billion.
What does this USD 10 billion REALLY mean though as the real level of output is USD 100 billion and that is genuinely produced? At one level, it means that the country has actually produced relatively little because the creation of the UDS 100 billion real GDP was actually weighed down by the reduction of USD 90 billion worth of environmental resources. Just accounting for real GDP is underestimating the true value of output. On another level, it means that the Real GDP of USD 100 billion is sustainable and not a good indicator of future output because the current levels of output was achieved at the expense of environmental degradation. Furthermore, it is also a reflection of standard of living as people's real income would not be as high as originally thought.
There is an implicit assumption that economic growth depends on natural resources. For this reason, for countries that do not rely on the environment to generate growth e.g. countries with high tech sectors, can theoretically have high levels of environmental degradation (for reasons not related to economic production), have a low Green GDP but that measure would not be meaningful. For example, Country A has a Real GDP of USD 200 billion and the main form of output is selling high tech equipment. Because of a huge fire, the entire forrest was burnt down and the value of environmental degradation is USD 180 billion. Green GDP is 200-180 = USD 20 billion. What is the an accurate measure of economic OUTPUT in this case? In this theoretical example, USD 200 billion is the correct answer as the environment has nothing to do with economic output. However, if one was to look at standard of living then the value of USD 20 billion will be more meaningful as the quality of environment affects the quality of life directly. If you guys have not already realised, this is the high level evaluation type comments that level 7 students would make.
This all sounds quite complicated but the main thing is to critically UNDERSTAND what the measure is trying to express. To what extent does it convey these meanings e.g. impact of output on the environment accurately? It is very important that you understand the underlying meanings accurately because the real world likes to throw numbers around to advocate their own agendas. This could be quite an interesting example for TOK essays...uhm....