Key Macroeconomic Concepts and Definitions

Posted on Feb 7, 2025 in Economy

Key Macroeconomic Concepts

Externalities: Positive or negative effects on third persons not included in the costs of the company without compensation.

Macroeconomics: The study of the economy as a whole for all economic agents in the country. The CPI, GDP, GNP, aggregate spending, consumption, investment, unemployment are the magnitudes of the variables.

Instruments:

  • State/Fiscal Policy: Using the state budget.
  • Monetary Policy: The amount used and the price of money (interest rates). Managed by the Spanish Central Bank, the ECB.
  • Politics: Bid to improve efficiency, productivity, and competitiveness.

GDP (Gross Domestic Product): Monetary value of production of final goods and services produced within an economy of a country in a time period, usually one year.

GNP (Gross National Product): Value of final production of goods and services made by firms and production factors for a year.

Methods of Calculating GDP

  1. Production or Value Added: Value of production – cost factor (benefit to the company).
  2. Expenditure: Private Consumption + Investment + Business and Family Spending + (Exports – Imports).
  3. Income or Interests: Salary + Company Benefits + Rental Subsidies (Official).

Formulas

  1. GDPmp: Consumption + Investment + Public Spending + (Exports – Imports)
  2. GNPmp: GDPmp + National Income from Overseas – Rentals Abroad at Home
  3. NNPmp: GNPmp – Depreciation
  4. NNPfc (National Income): NNPmp – Indirect Taxes + Grants
  5. Personal Income (PI): National Income + Undistributed Profits – Social Security Contributions + Tax Benefit Transfers + State + Transfer Officer (External)
  6. Personal Disposable Income (PDI): PI – Income Tax (Excise)

Externalities: Positive or negative effects on third persons not included in the costs of the company without compensation.

Macroeconomics: The study of the economy as a whole for all economic agents in the country. The CPI, GDP, GNP, aggregate spending, consumption, investment, unemployment are the magnitudes of the variables.

Instruments:

  • State/Fiscal Policy: Using the state budget.
  • Monetary Policy: The amount used and the price of money (interest rates). Managed by the Spanish Central Bank, the ECB.
  • Politics: Bid to improve efficiency, productivity, and competitiveness.

GDP (Gross Domestic Product): Monetary value of production of final goods and services produced within an economy of a country in a time period, usually one year.

GNP (Gross National Product): Value of final production of goods and services made by firms and production factors for a year.

Methods of Calculating GDP

  1. Production or Value Added: Value of production – cost factor (benefit to the company).
  2. Expenditure: Private Consumption + Investment + Business and Family Spending + (Exports – Imports).
  3. Income or Interests: Salary + Company Benefits + Rental Subsidies (Official).

Formulas

  1. GDPmp: Consumption + Investment + Public Spending + (Exports – Imports)
  2. GNPmp: GDPmp + National Income from Overseas – Rentals Abroad at Home
  3. NNPmp: GNPmp – Depreciation
  4. NNPfc (National Income): NNPmp – Indirect Taxes + Grants
  5. Personal Income (PI): National Income + Undistributed Profits – Social Security Contributions + Tax Benefit Transfers + State + Transfer Officer (External)
  6. Personal Disposable Income (PDI): PI – Income Tax (Excise)