Macroeconomics pressentation

PERFORMANCE ANALYSIS AND REPORT OF FOUR EUROPEAN ECONOMIES

MACROECONOMICS: QUESTION 1

PUBLISHED AND PRESENTED BY: LAWRENCE TALYOR & ZAHID MAHOMED

CONTENTS PAGE SECTION 1

INTRODUCTION

SECTION 2GROSS DOMESTIC PRODUCT

SECTION 3INFLATION

SECTION 4POPULATION

SECTION 5 UNEMPLOYMENT

SECTION 6ECONOMIC REPORT OF IRELAND

SECTION 7CONCLUSION

PUBLISHED AND PRESENTED BY: LAWRENCE TAYLOR & ZAHID MAHOMED DL245 YEAR 2

INTRODUCTION


WHAT IS ECONOMCIS?

ECONOMICS IS DEFINED AS “A SCIENCE WHICH STUDIES HUMAN BEHAVIOUR AS A

RELATIONSHIP BETWEEN SCARCE MEANS THAT HAVE ALTERNATIVE USES”

ROBBINS (1932).

MACROECONOMICS: Relates to the study of an economy as a whole. Analyses the behavior

and performance of an economy in general by dealing with topics such as inflation

unemployment and interest rates.

MICROECONOMICS: Is the Second branch of economics which analyses the behavior of

individual consumers and firms within an economy. Generally concerned with the interaction

and factors that have influence between buyers and sellers

GROSS DOMESTIC PRODUCT


GROSS DOMESTIC PRODUCT (GDP) is the total market value of final goods and

services produced within the borders of a nation during a fixed period of time.

Formula for Calculating GDP: Y = C + I + G + X - M

GDP = : Consumer Spending + Investment + Excess of Exports Over Imports +

Government Spending

Real GDP: Measurement of economic output produced within a economy for a specific time

frame adjusted for price changes within a market such as INFLATION and DEFLATION.

Nominal GDP : Also known as current dollar GDP, the total output produced by an economy for

a specific time frame NOT adjusted for INFLATION or DEFLATION

THE INCOME APPRAOCH

GROSS DOMESTIC PRODUCT


METHODS OF CALCULATING GDP

THE EXPENDITURE APPORACH

THE PRODUCTION APPROACH

THE INCOME APPROACH

THE INCOME APPROACH SUMS THE INCOME RECEIVED BY ALL PRODUCERS IN THE COUNTRY

WITHIN A SPECIFIC TIME FRAME. IT MEASURES GDP AS THE COMBINED SUM OF INCOMES

FROM THE FOUR MAIN FACTORS OF PRODUCTION WHICH INCLUDE:

WAGES

RENT

INTEREST

PROFIT / REVENUE

Source http://www.studyforex.com {accessed 10th November

2011)


http://www.studyforex.com/



THE VALUE ADDED APPROACH

THE VALUE ADDED APPROACH MEASURES GDP AS THE SUM OF THE VALUE-ADDED TO THE

PRODUCT OR SERVICE AT ALL STAGES OF THE PRODUCTION PROCESS. THE VALUE ADDED

APPROACH IS A METHOD THAT ELEIMATES THE ERROR OF DOUBLE COUNTING WHEN

CALCULATING GDP

EXAMPLE: VALUE IS ADDED TO WOOD WHEN

CUT FROM A TREE INTO LOGS

SANDED INTO USABLE WOOD PIECES

MANUFACTURED INTO CABNITES OR TABLES

SOLD TO A CONSUMER

THIS METHOD ISN'T AS WIDELY USED DUE TO THE FACT THAT DOUBLE COUNTING AND AN

EXAGGERATION OF THE TRUE MARKET VALUE OF GDP OCCURS QUET FREIQUENTLY


Source http:/ http://www.studyforex.com {accessed 10th

November 2011)



THE EXPENDITURE APPROACH

THE EXPENDITURE IS ONE OF THE THREE MAIN METHODS OF CALCULATING GDP THE

EXPENDITURE APPROACH MEASURES GDP BY CALCULATING THE FINAL SPENDING ON

GOODS AND SERVICES. THE EXPENDITURE APPROACH CALCULATES BY ADDING THE FOUR

MAIN TYPES OF EXPENDITURE WHICH ARE KOWN AS:

CONSUMPTION

INVESTMENT

GOVERNMENT SPENDING

NET EXPORTS

Source http://www.studyforex.com {accessed 10th November 2011)



ADVANTAGES OF GROSS DOMESTIC PRODUCT

UNIVERSAL & EASY TO COMPARE: DUE TO THE FACT THAT MOST NATIONS USE THE

MESURMENT GDP IT IS EASY TO COMPARE, IF REAL GDP IS CALCULATED THE GROWTH

PERCENTAGES WITH OTHER NATIONS FOR A SPECIFIC YEAR CAN BE COMPARED

ESTIMATES TOTAL NUMBER OF PRODUCTION: GROSS DOMESTIC PRODUCT HELPS TO

CALCULATE AND COMPARE THE TOTAL NUMBER OF PRODUCTION RECOURSES FOR A

SPECIFIC YEAR

CALCULATES NATIONAL INCOME: PROVIDES A METHOD FOR CACULATING NATIONAL INCOME

OF A SPECIFIC EOCNOMY FOR A TIME PERIOUD WHICH CAN PROVE USEFUL TO

GOVERNMENTS WHEN MAKING MACRO ECONOMIC DECISIOS

Source https://mywebspace.wisc.edu {accessed 10th November 2011}


https://mywebspace.wisc.edu/

LIMITATIONS OF GROSS DOMESTIC PRODUCT


DOESN’T TAKE INTO ACCOUNT THE UNDERGROUND ECONOMY: BUSINESS THAT TAKES

PLACE UNLAWFULLY WITH TAX AND VAT NOT PASSED ON TO THE GOVERNMENT ON THE

PRODUCTS OR SERVICES SOLD. EXAMPLE THE SALE OF FAKE DESIGNER CLOTHING. THIS

KIND OF TRAIDING LARGELY POPULAR IN GREECE, AND MANY 3RD WORLD COUNTRIES

WITHIN AFRICA WHERE TAX SYSTEMS ARE NOT 100% IMPLEMENTED THEREFORE CANNOT

BE ACCOUNTED

IGNORES HOUSEHOLD PRODUCITON: PRODUCTS OR SERVICES YOU MIGHT PRODUCE

FOR YOUR INDIVUDAL NEEDS OR WANTS, EXAMPLE BABYSITTING, OR TUTION SERVICE

DOESN’T FACTOR IN CHANGES IN LIFESPAN OF GOODS: FAILS TO RECOGNISE THE

ADVANCED RESEARCH INVESTED IN PRODUCING BETTER QULITY PRODUCTS THAT HAVE

LONGER LIFE SPANS FOR EXAMPLE A CAR THAT LASTS 10 YEARS.

Source https://mywebspace.wisc.edu {accessed 10th November 2011}



INFLATION

INFLATION IS SIMPLY DEFINED AS AN UPWARD MOVEMENT IN THE AVERAGE LEVEL OF

PRICES.

Kaplan (2009)

MACROECONOMICS IN GENERALLY CONCERNED WITH THE AGGREGATE CHANGE

WITH THE LEVEL OF PRICE, WHICH IS MESURED USING A PRICE INDEX THAT HAS A

WEIGHTED AVERAGE OF THE INDIVIDUAL PRICES INCLUDED IN IT.


CURRENTLY THERE IS MAJOR INFLATION IN

IRELAND WITH THE PRICES OF,

• Clothing

• Computers

• Petrol

DUE TO THE HIGH DEMAND AND LOW SUPPLY


DEFLATION

ACCORDING TO KAPLAN( 2009) THE TERM DEFLATION IS DEFINED AS A DOWNWARD

MOVEMENT IN THE AVERAGE LEVEL OF PRICES.

CURRENTLY WE ARE EXPERIENCING DEFLATION IN A NUMBER OF SECTORS IN THE

REPUBLIC OF IRELAND SOME OF THE MAJOR ONES BEING

EMPLOYMENT AND WAGES

PROPERTY

MOTOR CARS

DUE TO HIGH SUPPLY AND EXTREMLY LOW DEMAND

AT PRESSENT THEIR IS MAJOR DEFLATION IN

IRELAND WITH THE PRICES OF,


MESURING INFLATION

• THE MOST WIDELY USED INDEX FOR MEASURING INFLATION IN IRELAND IS KNOWN AS

THE CONSUMER PRICE INDEX..

• THE CENTRAL STATISTICS OFFICE OF IRELAND IS RESPONSIBLE FOR MEASURING THE

INFLATION RATES FOR EACH YEAR.

• A TOTAL OF 807 ITEMS ARE COLLECTED WHICH ARE CLASSIFIED AS ESSENTIAL

PRODUCTS AND SERVICES FOR THE AVERAGE IRISH HOUSEHOLD.

EFFECTS OF INFLATION

INTERNATIONAL COMPETITIVNESS

INFLATION IS A MAJOR FACTOR IN THE DETERMINATION OF A COUNTRIES COMPETITIVE

POSITON RELATING TO THE SPECIFIC COUNTRIES FIRMS ABILITY TO COMPETE FOR BUSINESS

WITH ITS INTERNATIONAL COMPETITIORS

DOLLARISAITON

ONCE INFLATION BECOMES ENTRENCHED THERE IS A DANGER THAT IT WILL TURN INCREASE IN

UNCONTROLLABLE RATES WHICH COULD RESULT IN HYPERINFLATION AS EXPERIENCE BY

GERMANY FOR EXAMPLE AFTER WORLD WAR 2

MENU AND SHOE LEATHER COSTS

INFLATION CAUSES THE PRICE INCREASE OF PRODUCTS AND SERVICES OFFERED BY MACRO

FIRMS WHO ARE PRESSENTED WITH THE EXTRA EXPENSE OF RE-PRINTING NEW PRICE LISTS

FOR CONSUMERS. EXAMPLE CAFÉ MENU’S

EFFECTS ON INCOME DISTURBITON

INFLATION CAN RESULT IN A MASSIVE REDISTRIBUTION OF INCOME BETWEEN DIFFERENT

GROUPS IN SOCIETIES . FOR EXAMPLE A SAVER WHO LEAVES MONEY IN THE BANK FROM A

NUMBER OF YEARS BACK FOR EXAMPLE 1970’S COULD RECEIVE A BANK INTEREST THAT IS

LESS THAT THE RATE OF INFLATION THEREFORE PUNISHING THE SAVER FOR HIS OR HER

CONSEVERTIVE ACTIONS. PUBLISHED AND PRESENTED BY: LAWRENCE TAYLOR & ZAHID MAHOMED DL245 YEAR 2

POPULATION

IS DEFINED AS A PARTICULAR SECTION, GROUP, OR TYPE OF PEOPLE OR ANIMALS LIVING IN

AN AREA OR COUNTRY.

UNEPLOYMENT

THE BUREAU OF LABOR DEFIENS THE TERM UNEMPLOYMENT AS PEOPLE WHO DO NOT

HAVE A JOB, HAVE ACTIVELY LOOKED FOR WORK IN THE PAST FOUR WEEKS, AND ARE

CURRENTLY AVAILABLE FOR WORK

OCCURS WHEN PEOPLE ARE WITHOUT JOBS AND THEY HAVE ACTIVELY SOUGHT WORK

WITHIN THE PAST FOUR WEEKS

THE MOST FREQUENTLY CITED MEASURE OF UNEMPLOYMENT IS THE UNEMPLOYMENT

RATE. THIS IS THE NUMBER OF UNEMPLOYED PERSONS DIVIDED BY THE NUMBER OF

PEOPLE IN THE LABOUR FORCE.

UNEMPLOYMENT DOES NOT INCLUDE FULL-TIME STUDENTS, THE RETIRED, CHILDREN, OR

THOSE NOT ACTIVELY LOOKING FOR A PAYING JOB.

TYPES OF UNEMPLOYMENT

• Frictional Unemployment

• Cyclical Unemployment

PART B

REPORT ON THE ECONOMY OF

REPUBLIC OF IRELAND

2006

2007

2008

2009

2010

-$20.00 -$15.00 -$10.00 -$5.00 $0.00 $5.00 $10.00 $15.00 $20.00 $25.00 $30.00

REPUBLIC OF IRELAND FOREIGH DIRECT INVESTMENT ( 2006 - 2010 )

FOREIGN DIRECT INVESTMENT (DISPLAYED USD BILLION )

Source: www.google.com/publicdata (ACCESSED 10th November 2011)

2006 2007 2008 2009 2010-$5.52 $24.58 -$16.33 $26.55 $27.08

http://www.google.com/publicdata

GDP Growth %: 2006

REPUBLIC OF IRELAND FRANCE GREECE UK

5.3% 2.5% 5.2% 2.8%

GDP COMPOSITION BY SECTOR


Agriculture 1.30% 3.0% 3.3% 1%

Industry 34.62% 4.9% 20.8% 25.6%

Service 64.08% 92.1% 75.9% 73.4%

http://monaco.angloinfo.com/countries/monaco/cia4.asp (accessed 10th November 2011)http://www.woodlands-junior.kent.sch.uk/customs/questions/economy.htm (Accessed 10th November 2011)http://www.allcountries.org/wfb2007/greece/greece_economy.html (Accessed 10th November 2011)

http://monaco.angloinfo.com/countries/monaco/cia4.asp

http://www.woodlands-junior.kent.sch.uk/customs/questions/economy.htm

http://www.allcountries.org/wfb2007/greece/greece_economy.html

GROSS DOMESTIC PRODUCE: 2006 FIGURE (REAL) DISPLAYED IN US DOLLAR


$203.89 BILLION $2.25 TRILLION $304.86 BILLION $2.44 TRLLION

GROSS DOMESTIC PRODUCE PER CAPITA: 2006 ( REAL) DISPLAYED IN US DOLLAR


$52220 $35558 $23777 $40335

Sourced: http://www.google.ie/publicdata (Accessed: 10th November 2011)


http://www.google.ie/publicdata


2006

2007

2008

2009

2010

-$20.00 -$15.00 -$10.00 -$5.00 $0.00 $5.00 $10.00 $15.00 $20.00 $25.00 $30.00

REPUBLIC OF IRELAND FOREIGH DIRECT INVESTMENT ( 2006 - 2010 )

FOREIGN DIRECT INVESTMENT (DISPLAYED USD BILLION )


2006 2007 2008 2009 2010-$5.52 $24.58 -$16.33 $26.55 $27.08


2006 2007 2008 2009 2010130

135

140

145

150

155

160

165

170

175

REPUBLIC OF IRELAND: 2006 - 2010GROSS NAITONAL PRODUCT: (DISPLAYED IN US DOLLAR)

(REAL)

YEAR

GRO

SS N

ATIO

NAL

PRO

DUCT

( U

S DO

LLAR

M

ILLI

ON

S)

Source: WWW.Google.com/publicdata {Accssed: 10/11/2010}


2006 2007 2008 2009 2010

156.23 169.62 164.18 147.01 145.72


2006 2007 2008 2009 2010$0.00

$50.00

$100.00

$150.00

$200.00

$250.00

$300.00

REPUBLIC OF IRRELAND: 2006 - 2010(REAL) GROSS DOMESTIC PRODUCE FIGURE

YEAR

GD

P SU

M IN

BIL

LIO

NS


2006 2007 2008 2009 2010

$222.47 $259.18 $263.65 $221.77 $203.89


2006 2007 2008 2009 2010

-10.00%

-8.00%

-6.00%

-4.00%

-2.00%

0.00%

2.00%

4.00%

6.00%

8.00%

REPUBLIC OF IRELAND: 2006 - 2010 GROSS DOMESTIC PRODUCE: GRWOTH IN % FORMAT

YEAR

% G

RWO

TH O

F G

DP


2006 2007 2008 2009 2010

5.30% 5.60% -3.50% -7.60% -1.00%


2006 2007 2008 2009 2010

-6.00%

-4.00%

-2.00%

0.00%

2.00%

4.00%

6.00%

REPUBLIC OF IRELAND: 2006 - 2010INFLATION RATE %

YEAR

INFL

ATI

ON

RA

TESource: WWW.Google.com/pub-licdata {Accssed: 10/11/2010}


2006 2007 2008 2009 2010

3.90% 4.90% 4.10% -4.50% -1.60%


INFLATION RATE 2006

REPUBLIC OF IRELAND

FRANCE GREECE UK

3.9% 1.5% 3.3% 3%

TOTAL POPULATION 2006 ( Millions)


4.26 63.53 M 11.14 M 60.59 M





UNEMPLOYMENT % 2006


9.2% 8.7% 9.2% 2.9%


GNP (REAL)(Displayed in US Dollar)


$156.23 Billion $2.02 Trillion $295.58 Billion $ 2.13 Trillion




GNP PER CAPITA ( DISPLAYED IN US DOLLAR)


$36670 $31840 $26510 $35150



Jan-06 Jan-07 Jan-08 Jan-09 Jan-100.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

REPUBLIC OF IRELAND: 2006 - 2010 UNPLOYMENT % RATE

YEAR

PERC

ENTA

GE

RATE

UN

EMPL

OYE

D

Jan-06 Jan-07 Jan-08 Jan-09 Jan-10

4.30% 4.40% 4.80% 9.40% 13.00%



2006 2007 2008 2009 2010$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

REPUBLIC OF IRELAND: 2006 - 2010REAL GDP PER CAPITA (DISPLAYED IN US DOLLAR) ( REAL)

YEAR

GROS

S DOM

ESTIC

PRO

DUCE

PER

CAP

ITA

Source: WWW.Google.com/publicdata {Accssed: 10/11/2010}Source: WWW.Google.com/publicdata {Accssed: 10/11/2010}

2006 2007 2008 2009 2010

$52,220 $59,548 $59,573 $49,738 $45,497



2006 2007 2008 2009 2010

-20.00%

-15.00%

-10.00%

-5.00%

0.00%

5.00%

10.00%

REPUBLIC OF IRELAND: 2006 - 2010CONSUMER SPENDING % CHANGE

YEAR

CON

SUM

ER S

PEN

DIN

G %

2006 2007 2008 2009 2010

8.10% 7.30% -4.50% -18.00% -2.00%



2006 2007 2008 2009 20104.1

4.15

4.2

4.25

4.3

4.35

4.4

4.45

4.5

REPUBLIC OF IRELAN: 2006 - 2010POPULATION GRAPH

YEAR

POPU

LATI

ON

FIG

URE

(MILL

ION

S)

2006 2007 2008 2009 2010

4.26 M 4.35 M 4.43 M 4.46 M 4.48 M



2006 2007 2008 2009 20100.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

REPUBLIC OF IRELAND: 2006 - 2010 POULATION % GRWOTH

YEAR

PERC

ENTA

GE

GRO

WTH

2006 2007 2008 2009 20102.40% 2.20% 1.60% 0.70% 0.50%



Jan-06 Jan-07 Jan-08 Jan-09 Jan-100.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

REPUBLIC OF IRELAND: 2006 - 2010% UNEPLOYMENT YOUTH: 25 YEARS AND UNDER

YEAR

% O

F UN

EMPL

OYM

ENT

Jan-06 Jan-07 Jan-08 Jan-09 Jan-10

8.90% 8.70% 9.90% 19.40% 27.00%



2006 2007 2008 2009 2010

-6.00%

-4.00%

-2.00%

0.00%

2.00%

4.00%

6.00%

REPUBLIC OF IRELAND: 2006 - 2010INFLATION RATE %

YEAR

INFL

ATI

ON

RA

TESource: WWW.Google.com/pub-licdata {Accssed: 10/11/2010}


2006 2007 2008 2009 2010

3.90% 4.90% 4.10% -4.50% -1.60%


2006 2007 2008 200972.00%

74.00%

76.00%

78.00%

80.00%

82.00%

84.00%

86.00%

88.00%

90.00%

92.00%

REPUBLIC OF IRELAND: 2006 - 2010EXPORTS AS A % OF GDP

Axis Title

Source: WWW.Google.com/pub-licdata {Accssed: 10/11/2010}


2006 2007 2008 2009

79.30% 83.50% 83.40% 90.70%


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