New Course: Principles of Macroeconomics!

Principles of Macroeconomics, the new course by Tyler and myself, has just launched at MRUniversity. We will be covering unemployment, inflation, business cycles, growth and much more. The first section which is up now covers GDP including

As usual, all the videos are free and will work with any textbook although of course they go best with the best textbook, Modern Principles.

Here is the introduction to GDP:

Comments

Are Apple computers that are made in (for example) China and sold to a U.S. consumer included as part of U.S. GDP or China's GDP? I think the answer is yes. What?

They are part of GNP, which used to be the metric of choice, but apparently GDP makes a country look a little richer or something. And the engineering (done in Silicon Valley) is part of US GDP.

But the engineering isn't the final product - the final product is the computer. Only final products are part of GDP.

@rayward - I believe' value added' captures the 'final product' such that US engineering would be included in the example given...I will let a professional economist correct me if I'm wrong.

Wikipedia: "Gross domestic product (GDP) is a measure of the size of an economy. It is defined as "an aggregate measure of production equal to the sum of the gross values added of all resident, institutional units engaged in production (plus any taxes, and minus any subsidies, on products not included in the value of their outputs)" by the OECD"

Not all of the parts, including profits of a computer made in China are made in China.

The portion of the value added in the US -- like design and marketing -- are included in the US GDP.

If that's the case, then the MRU video is incorrect. I have the impression that commenters didn't watch the video.

"What is GDP?" is of course a question on a par with "What is God?" rather than "What is entropy?".

As a title "Principles of Macroeconomics" is OK, but a more interesting book might be on "The Unprincipled in Macroeconomics".

Well, MRU is free, provided by two leading lights of the Mercatus Center, which makes one wonder why anyone would pay $99.42 for a loose leaf book titled Modern Principles: Macroeconomics ( http://www.amazon.com/Modern-Principles-Macroeconomics-Loose-Leaf/dp/1429250135 )

Probably has something to do with how entrenched institutions force involuntary payments from those subjected to institutional whim. At least, the Virginia School would heartily agree with such an assessment of a system that highly rewards those with lifetime employment (at taxpayer expense) who can require further payment to their own bank accounts from those under their control.

Not baad but guy talked a slight tad too quickly.

So how does markup affect GDP? If a computer is built in the US and sold to a UK store for $500, and they then sell it on to a customer for $750, does this add $500 to the US GDP and $250 the the UK GDP, because of the value added by the computer being in the UK?

Also, does a plumber hired by a company to fix their building add to GDP, or not? Is it in the same category as capital goods?

If house prices go up, say from $150k to $200k, does that add to the GDP if the house is sold? How do appreciation and depreciation affect GDP?

The video omits discussion of one of the biggest components of GDP: government spending. Pay a bureaucrat $150,000 to sit in an office and provide nothing of value, that's $150,000 added to GDP. Even better, use deficit spending to do so and you've just created GDP growth!

Why to think so small? Waste billions on the F-35 and you will have created a much bigger GDP growth even before any of the planes fly and even if they never do--and they won't-- anything useful.

"me," not "myself."

Amazing how often people get this wrong. Probably due to the intellectual's inability to use "me."

Nice work guys.

Meh. Some of the other MRU videos manage to communicate one or two actual insights, but this one just throws a litany of unmotivated distinctions at the user. Would be much better to explain why these distinctions have been adopted. Perhaps over the course of multiple videos starting with a toy economy (say an island where everyone just picks and eats bananas; no government, no trade, no intermediate goods) and gradually introducing complicating factors.

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