Microeconomics pressentation slides on the exploration of 5 different countries

1. MACROECONOMICS: QUESTION 1
PERFORMANCE ANALYSIS AND REPORT OF FOUR
EUROPEAN ECONOMIES

2. SECTION 1
INTRODUCTION
SECTION 2
GROSS DOMESTIC PRODUCT
SECTION 3
INFLATION
SECTION 4
POPULATION
SECTION 5
UNEMPLOYMENT
SECTION 6
ECONOMIC REPORT OF IRELAND
SECTION 7
CONCLUSION

3. 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

4. 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

5. GROSS DOMESTIC PRODUCT
METHODS OF CALCULATING GDP

6. 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)

7. 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)

8. 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)

9. 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}

10. 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}

11. 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

12. 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
AT PRESSENT THEIR IS MAJOR DEFLATION IN
IRELAND WITH THE PRICES OF,
 EMPLOYMENT AND WAGES
 PROPERTY
 MOTOR CARS
DUE TO HIGH SUPPLY AND EXTREMLY LOW DEMAND

13. 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.

14. 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.

15. POPULATION
IS DEFINED AS A PARTICULAR SECTION, GROUP, OR TYPE OF PEOPLE OR ANIMALS LIVING IN
AN AREA OR COUNTRY.

16. 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

17. PART B
REPORT ON THE ECONOMY OF
REPUBLIC OF IRELAND

19. GDP Growth %: 2006
REPUBLIC OF IRELAND FRANCE GREECE UK
5.3% 2.5% 5.2% 2.8%
GDP COMPOSITION BY SECTOR
REPUBLIC OF IRELAND FRANCE GREECE UK
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)

20. GROSS DOMESTIC PRODUCE: 2006 FIGURE (REAL) DISPLAYED IN US DOLLAR
REPUBLIC OF IRELAND FRANCE GREECE UK
$203.89 BILLION $2.25 TRILLION $304.86 BILLION $2.44 TRLLION
Sourced: http://www.google.ie/publicdata (Accessed: 10th November 2011)
GROSS DOMESTIC PRODUCE PER CAPITA: 2006 ( REAL) DISPLAYED IN US DOLLAR
REPUBLIC OF IRELAND FRANCE GREECE UK
$52220 $35558 $23777 $40335
Sourced: http://www.google.ie/publicdata (Accessed: 10th November 2011)

22. REPUBLIC OF IRELAND: 2006 - 2010
GROSS NAITONAL PRODUCT: (DISPLAYED IN US
DOLLAR)(REAL)
175
GROSS NATIONAL PRODUCT ( US DOLLAR
170
165
160
155
MILLIONS)
150
145
140
135
130
2006 2007 2008 2009 2010
Source: WWW.Google.com/publicdata {Accssed: 10/11/2010}
YEAR
2006 2007 2008 2009 2010
156.23 169.62 164.18 147.01 145.72
Source: www.google.com/publicdata (ACCESSED 10th November 2011)

23. REPUBLIC OF IRRELAND: 2006 - 2010
(REAL) GROSS DOMESTIC PRODUCE FIGURE
$300.00
$250.00
GDP SUM IN BILLIONS
$200.00
$150.00
$100.00
$50.00
$0.00
2006 2007 2008 2009 2010
YEAR
2006 2007 2008 2009 2010
$222.47 $259.18 $263.65 $221.77 $203.89
Source: www.google.com/publicdata (ACCESSED 10th November 2011)

24. REPUBLIC OF IRELAND: 2006 - 2010
GROSS DOMESTIC PRODUCE: GRWOTH IN % FORMAT
8.00%
6.00%
4.00%
% GRWOTH OF GDP
2.00%
0.00%
2006 2007 2008 2009 2010
-2.00%
-4.00%
-6.00%
-8.00%
-10.00%
YEAR
2006 2007 2008 2009 2010
5.30% 5.60% -3.50% -7.60% -1.00%
Source: www.google.com/publicdata (ACCESSED 10th November 2011)

25. Source:
WWW.Google.com/publicdata
REPUBLIC OF IRELAND: 2006 - 2010
{Accssed: 10/11/2010}
INFLATION RATE %
6.00%
4.00%
2.00%
INFLATION RATE
0.00%
2006 2007 2008 2009 2010
-2.00%
-4.00%
-6.00%
YEAR
2006 2007 2008 2009 2010
3.90% 4.90% 4.10% -4.50% -1.60%
Source: www.google.com/publicdata (ACCESSED 10th November 2011)

26. INFLATION RATE 2006
REPUBLIC OF FRANCE GREECE UK
IRELAND
3.9% 1.5% 3.3% 3%
Sourced: http://www.google.ie/publicdata (Accessed: 10th November 2011)
TOTAL POPULATION 2006 ( Millions)
REPUBLIC OF IRELAND FRANCE GREECE UK
4.26 63.53 M 11.14 M 60.59 M
Sourced: http://www.google.ie/publicdata (Accessed: 10th November 2011)

27. UNEMPLOYMENT % 2006
REPUBLIC OF IRELAND FRANCE GREECE UK
9.2% 8.7% 9.2% 2.9%
Sourced: http://www.google.ie/publicdata (Accessed: 10th November 2011)
GNP (REAL)(Displayed in US Dollar)
REPUBLIC OF IRELAND FRANCE GREECE UK
$156.23 Billion $2.02 Trillion $295.58 Billion $ 2.13 Trillion
Sourced: http://www.google.ie/publicdata (Accessed: 10th November 2011)

28. GNP PER CAPITA ( DISPLAYED IN US DOLLAR)
REPUBLIC OF IRELAND FRANCE GREECE UK
$36670 $31840 $26510 $35150
Sourced: http://www.google.ie/publicdata (Accessed: 10th November 2011)

29. REPUBLIC OF IRELAND: 2006 - 2010
UNPLOYMENT % RATE
14.00%
PERCENTAGE RATE UNEMPLOYED
12.00%
10.00%
8.00%
6.00%
4.00%
2.00%
0.00%
Jan-06 Jan-07 Jan-08 Jan-09 Jan-10
YEAR
Jan-06 Jan-07 Jan-08 Jan-09 Jan-10
4.30% 4.40% 4.80% 9.40% 13.00%
Source: www.google.com/publicdata (ACCESSED 10th November 2011)

30. REPUBLIC OF IRELAND: 2006 - 2010
REAL GDP PER CAPITA (DISPLAYED IN US DOLLAR) ( REAL)
$70,000
$60,000
GROSS DOMESTIC PRODUCE PER CAPITA
$50,000
$40,000
$30,000
$20,000
$10,000
$0
2006 2007 2008 2009 2010
Source: WWW.Google.com/publicdata {Accssed: 10/11/2010} YEAR
2006 2007 2008 2009 2010
$52,220 $59,548 $59,573 $49,738 $45,497
Source: www.google.com/publicdata (ACCESSED 10th November 2011)

31. REPUBLIC OF IRELAND: 2006 - 2010
CONSUMER SPENDING % CHANGE
10.00%
5.00%
0.00%
CONSUMER SPENDING %
2006 2007 2008 2009 2010
-5.00%
-10.00%
-15.00%
-20.00%
YEAR
2006 2007 2008 2009 2010
8.10% 7.30% -4.50% -18.00% -2.00%
Source: www.google.com/publicdata (ACCESSED 10th November 2011)

32. REPUBLIC OF IRELAN: 2006 - 2010
POPULATION GRAPH
4.5
4.45
4.4
POPULATION FIGURE (MILLIONS)
4.35
4.3
4.25
4.2
4.15
2006 2007 2008 2009 2010
YEAR
2006 2007 2008 2009 2010
4.26 M 4.35 M 4.43 M 4.46 M 4.48 M
Source: www.google.com/publicdata (ACCESSED 10th November 2011)

33. REPUBLIC OF IRELAND: 2006 - 2010
POULATION % GRWOTH
3.00%
2.50%
PERCENTAGE GROWTH
2.00%
1.50%
1.00%
0.50%
0.00%
2006 2007 2008 2009 2010
YEAR
2006 2007 2008 2009 2010
2.40% 2.20% 1.60% 0.70% 0.50%
Source: www.google.com/publicdata (ACCESSED 10th November 2011)

34. REPUBLIC OF IRELAND: 2006 - 2010
% UNEPLOYMENT YOUTH: 25 YEARS AND UNDER
30.00%
25.00%
20.00%
% OF UNEMPLOYMENT
15.00%
10.00%
5.00%
0.00%
Jan-06 Jan-07 Jan-08 Jan-09 Jan-10
YEAR
Jan-06 Jan-07 Jan-08 Jan-09 Jan-10
8.90% 8.70% 9.90% 19.40% 27.00%
Source: www.google.com/publicdata (ACCESSED 10th November 2011)

35. Source:
WWW.Google.com/publicdata
REPUBLIC OF IRELAND: 2006 - 2010
{Accssed: 10/11/2010}
INFLATION RATE %
6.00%
4.00%
2.00%
INFLATION RATE
0.00%
2006 2007 2008 2009 2010
-2.00%
-4.00%
-6.00%
YEAR
2006 2007 2008 2009 2010
3.90% 4.90% 4.10% -4.50% -1.60%
Source: www.google.com/publicdata (ACCESSED 10th November 2011)

36. Source: REPUBLIC OF IRELAND: 2006 - 2010
WWW.Google.com/publicdata
{Accssed: 10/11/2010} EXPORTS AS A % OF GDP
92.00%
90.00%
88.00%
86.00%
84.00%
Axis Title
82.00%
80.00%
78.00%
76.00%
74.00%
72.00%
2006 2007 2008 2009
2006 2007 2008 2009
79.30% 83.50% 83.40% 90.70%
Source: www.google.com/publicdata (ACCESSED 10th November 2011)