macroeconomics National Income Measurement 1 National Income Flow
- Slides: 7
macroeconomics National Income - Measurement 1
§ National Income § Flow (per year) § Flow chart § Messy flow chart § Could slice it several ways § GDP, gross domestic product § § § Amount of output within a country in a year = all expenditures = all incomes Why two sides are same? Value added § Intermediate goods § Final goods 2
§ GDP, expenditure side § Consumption C § Goods, services § Investments I § Plants and equipment § Residential structures, new § Inventories § Government purchases G § Not transfers § Net exports NX § Exports § Imports § Y = C + I + G + NX § current 3
§ GDP, income side § Payments to factors § Wages + § Profits + § Rent + § Taxes § Depreciation § Y = n. DP + ΔK + T § current § C + I + G + NX = Y = n. DP + ΔK + T § Statistical discrepancy 4
§ GNP § GDP = within Canada § GNP = by/to Canadian nationals § GDP, how well an economy is doing § GNP, how well the citizens are § Migration § Remittances 5
§ This is nominal GDP § Real GDP = GDP at base-year prices § “at constant price level” or “at constant $” § GDP deflator § Index of price level § GDP deflator = (nominal GDP/real GDP) x 100 § GDP deflator vs CPI § Domestic VS domestic + imports § Everything VS consumption goods and services 6
§ GDP is often best used in per capita terms § But not always § GDP is missing stuff § § Illegal economy Underground economy Production with no formal market Consumption with no market § GDP is a rough estimate § …of what? § § § “livable cities” Environment Freedoms Health Etc § HDI 7
