5 - TAKING THE NATION'S ECONOMIC PULSE

Abstract

This chapter reviews the nation's economic pulse. It describes microeconomics and macroeconomics. Analysis that focuses on a single commodity, or at that most a single industry, is referred to as microeconomics. The unit of analysis in microeconomics is one single producing or consuming unit. Macroeconomics, like microeconomics, is concerned with markets, prices, and the determination of equilibrium; however, in macroeconomics, the markets are considered together as a whole. The chapter also provides an overview of the gross national product (GNP), which is primarily a macroeconomic concept. GNP deals with more than one producing or consuming unit. The gross national product is a measure of the market value of all final goods and services produced during a specific time period. GNP is a flow concept and is typically measured in terms of an annual rate. It is designed to measure the market value of production that flows through the economy's factories and shops each year. Thus, GNP is similar to a water gauge that measures the amount of water that flows through a pipe each hour. The chapter further provides an overview of the net national product (NNP). NNP is the total market value of consumption, and government goods and services produced plus any net additions to the nation's capital stock. In accounting terms, NNP is simply GNP minus depreciation.