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?
Example of two student roommates:
foreign interest income: $200
parents gift: $5000
Total income: $38,200
Subtract transfer payments: $35,200
GDP income: $3000
Tuition for education: $24,000 (counted as consumption in GDP)
Food and room: $10,000
Books and supplies: $2000
parties and entertainment: $800
Total consumption: $37,200
Labor exports: $3000
Purchase of a foreign asset: $1000 to savings acct.
GDP spending: $3000
GDP income = GDP spending
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
V = T/M = 13200/ 1000 = 13.2
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