Journaling of Chapter 23: Measuring a Nation's Income

Chapter 23, Measuring a Nation’s Income, marks the start of macroeconomics, the study of the entire economy as a whole. This section mostly deals with GDP, gross domestic product, a measure of the total income or total output into the economy. Thus, income equals expenditure. GDP is officially defined as the market value of all final goods and services produced within a country in a given period of time. The different components of GDP include consumption, investment, government purchases on goods and services by all levels of the government, and net exports. Readers also learn the difference between real GDP and nominal GDP. Nominal GDP is the value of output measured in the prices that existed during the year in which the output was produced. Real GDP is the value of output measured in the prices that were in a base year. GDP deflator is a measure of the price level. GDP deflator = (nominal GDP/real GDP) × 100. Real GDP is also a strong indicator of economic well-being of a society.

Overall, I would give this chapter a difficulty rating of 1 out of 3. Though the concepts are new, this chapter is relatively easy because they’re just trying to ease the readers into macroeconomics at this point. Since microeconomics and macroeconomics are closely linked, I believe that this transition between subjects will be smooth. However, I am excited to move on from microeconomics and start seeing the bigger picture. I’m sure that my knowledge on supply and demand will help me in future chapters as well.