Macroeconomy

Choose a real residential community of more than one person. ( Community located in CA is better)

Describe its macroeconomy.

Treat the community as though it were a country.

If people don’t want to disclose information, select another community.

Answer these questions:

What kind of governance does your community have?

E.g. homeowner’s association, SCU and dorm administration, city government.

How are financial decisions made?

Calculate the GDP and its parts:

List on a table, and enter the totals of income from all sources, including wages, loans, scholarships, and gifts.

You don’t need to list the individual persons’ incomes.

List and describe the categories (consumption, investment) and totals of spending, including tuition and housing, and savings.

List the purchase and sale of foreign assets such as a bank account.

Include total income and GDP income and spending.

List these in tables, and then provide relevant explanations.

Have there been any investments?

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Example of two student roommates:

Income, annual

wages: $3000

foreign interest income: $200

scholarship: $30,000

parents gift: $5000

Total income: $38,200

Subtract transfer payments: $35,200

GDP income: $3000

Spending

Tuition for education: $24,000 (counted as consumption in GDP)

Food and room: $10,000

Books and supplies: $2000

parties and entertainment: $800

transportation: $400

Total consumption: $37,200

Imports: -$37,200

Labor exports: $3000

Purchase of a foreign asset: $1000 to savings acct.

GDP spending: $3000

GDP income = GDP spending

Financial account

Net exports = exports – imports = $3000 – $37,200 = $34,200

Capital inflow = $1000 – $35,200 = -$34,200

What is the demand for money (average cash holding, including bank accts)?

What is the velocity of the money, per year? (use MV=PT setting P=1).

Average money held = $1000, in bank account + wallet

Velocity = T/M = 37,200 / 1000 = 37.2

excluding tuition

V = T/M = 13200/ 1000 = 13.2

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Describe the labor of the community.

Is there any unemployment? If so, what kind, and why?

Describe the taxes paid or received: income, sales, property

 

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