Variables of macroeconomics, Macroeconomics Video Lecture | Macro Economics - B Com

okay and I welcome to part three of this
video lecture series we ended part two
having looked at some South African
statistical data and admittedly going
through the descriptive statistics is
not the most fun and exciting part of
this course but it was nevertheless
interesting to find out that our country
had in fact grown over the last ten
years I was quite excited wondering
which are the African country we had
claimed a part of but alas it was far
less exciting and we had simply claimed
some of the ocean so that brings us to
part three which is talking about our
different macroeconomic variables how we
measure them so variables we will be
looking at our GDP growth the business
cycle unemployment and inflation but we
will begin with GDP so what is it why is
it important there are two ways of
measuring it an income approach and an
expenditure approach we will look at the
difference between real GDP and nominal
GDP then we will talk about some
shortcomings when it comes to using GDP
forward reusable great so definition GDP
is the market value of all final goods
and services produced within a country
in a specific time period usually one
year so there's a couple of important
parts in this statement the first is
that we are dealing with market value
market value means that it has an
Associated price a price that is
measured in monetary terms right so in
South Africa we looked at in the
previous part we looked at a table which
said that South African GDP was almost
three trillion rand so there we go it's
a market value it is measured in Rand
terms rands being a
three value right it's a market value
we're talking about goods and services
okay and there are final goods and
services what that means is that
intermediate goods and services are not
included in other words if you buy
something from the shop something
exciting like an iron right I mean iron
four are in mining your clothing if you
buy that iron right and the value of
that iron as a hundred round then GDP in
South Africa goes up or when that iron
was created so GDP in South Africa went
up by 100 Rand okay we don't include the
fact that there was a piece of metal
valued at five Rand there was a piece of
plastic there was an electrical cord one
of those had value and the value of all
those things might have been fifty rare
right but we assume that that value is
included in the final price of that iron
so when we buy it for a hundred Rand
we are already implicitly including the
price of the piece of metal and the
bottom and the electrical cord and the
plug and all the other bits and pieces
that go into the iron so that is what we
mean by final and what we mean when we
say we don't include intermediate
products what we mean is we don't say
the price of the iron is 100 and then we
add the price of the plug and the
electrical cable which was say five
around and add that to our hundred rad
to make 105 red plus the price of the
piece of metal plus the plastic
bah-bah-bah-bah-bah and finally we have
some product that's worth a thousand
Rand no so hundred Rand includes all the
intermediate steps in making the final
product so it's only the final value
that we are interested in of course
these are things that are produced
within our country right produced within
South Africa must be produced must be in
South Africa which means there are no
second-hand sales included or if I am
living off a social grant and I get
given money by the government that
not get included in GDP that is not
something that was produced within the
country but simply transferred from one
person to another okay so why is it
important well we use it to assist
economic performance govern being what
it is likes to middle in our lives likes
to you know have it to say likes to get
things done
what GDP does is is it allows us to have
a measure of how well the cut the
economy performed in relation to others
or even in real terms into in terms of
what we can consume our wealth things
like that so as an example it's nice to
go and take a look at your bank account
is that value at the bottom of your bank
account it gives you well it's usually
nice to look in your bank accounts
sometimes you get horrible shocks but
there's a number at the bottom and that
number gives you an idea of how well you
as an individual are doing well GDP the
measure of GDP is like that bank balance
the higher the GDP number the better the
economy is doing essentially the higher
that number the more money each person
in the economy on average has the more
money each person in the economy has on
average is if it's an OK indication of
how well people are doing it's certainly
a good indication of how well they are
doing financially maybe not a good
indication of how well they are doing in
terms of things like health or happiness
but we'll talk more about that so if we
can assist our GDP performance what that
does is that gives us what gives the
government an idea of how it should be
interfering in the economy how it should
be
redirecting resources from one place to
another
what it should be taxing what it should
be subsidizing what it should be
encouraging right in other words it has
policy implications
we know how how well we're doing in our
GDP that has policy implications because
essentially you can't manage what you
can't measure so first of all we need to
measure how well the economy is doing
and then we can step back and say okay
what do we need to do to try and make it
run better assuming that the government
is going to make it run bit okay let's
give the video there