CFA Level I MacroeconomicsPresented by: Aditya Ahluwaliawww.finstructor.in

GDP total market value of goods and services produced in a country within a certain time periodTransfer payments not includedUses market value of goods and servicesUses only goods produced within that periodIntermediate goods are not included

Sum of value added and value of final output method

Nominal and Real GDP

Expenditure approach

National income income received by all factors of production that create final output

Personal income pretax income to households

Aggregate demandConsumption Marginal propensity to consume (MPC) and Marginal propensity to Save (MPS). MPC + MPS = 100%Investment Int rates and profitabilityGovernment purchases tax revenue (can be considered independent)Net exports relative prices of goods

IS curve

IS Curve

LM Curve

LM Curve

Aggregate Supply

Shift in aggregate demandIncrease in consumers wealthBusiness expectationsConsumer expectationsHigher capacity utilizationExpansionary monetary policyExpansionary fiscal policyExchange ratesGlobal economic growth

Shift in SRAS

Shift in LRAS

Long run equilibrium

Disequilibrium

Adjustment to increase in demand

Adjustment to decrease in demand

Implications for analysisRecessionary Gap

Implications for analysisInflationary Gap

Implications for analysisInflationary Gap

Stagflation

Labor supplyHuman capitalPhysical capital stockTechnologyNatural resources

Production Function

Business CycleKeynesian school level of optimism of those who run businessesNew Keynesian school downward sticky wagesMonetaristAustrian school government interventionNew classical school changes in technology and external shocks

Economic Indicators

Economic Indicator