Chapter Two National Income Accounting Gross Domestic Product and Gross National Product 1. Calculating GDP Final goods and value added current output.

Slides:



Advertisements
Similar presentations
Measuring National Output and National Income
Advertisements

The Measurement and Structure of the Natural Economy
National-Income Accounting
Chapter 2 National Income Accounting
National Income Accounting. Introduction Why do we study the national income accounts? 1.National income accounting provides structure.
Chapter 2: The Data of Macroeconomics
1 Chapter 2:The Measurement and Structure of the Canadian Economy National Income Accounts – An accounting framework to measure current economic activity.
Outline 1.Measurement of GDP 2.Savings, wealth and capital 3.Nominal and real GDP and price indices 4.Labor market measurement.
National Income Accounting
Chapter 2 The Measurement and Structure of the Canadian Economy Economics 282 University of Alberta.
Copyright 2000 Addison-Wesley Longman CHAPTER 2 The Measurement of Income, Prices, and Unemployment It has been said that figures rule the world; maybe.
Gross Domestic Product (GDP) The sum of the flow of all final economic goods and services produced by the domestic economy during a relevant period of.
1 National Income and Product Accounting Gross vs. Net Domestic vs. National Product vs. Income.
Maclachlan, Macroeconomics, 9/30/04 1 Principles and Policies I: Macroeconomics Chapter 7: National Income Accounting.
Chap 10, Mankiw – Measurement of national income
GDP and the CPI: Tracking the Macroeconomy
Chapter 15 Gross Domestic Product
Slide 8-1 The Simple Circular Flow. Slide 8-2 The Simple Circular Flow.
Chapter 11 Practice Quiz Tutorial Gross Domestic Product
Learning Objectives Know what GDP measures – and what it doesn’t Know the difference between real and nominal GDP Know why aggregate.
Copyright  2002 McGraw-Hill Australia Pty Ltd PPTs t/a Macroeconomics by Dornbusch, Bodman, Crosby, Fischer and Startz 1 Chapter 2 National Income Accounting.
Chapter 2 The Measurement and Structure of the Canadian Economy Copyright © 2012 Pearson Education Inc.
Chapter 24 Measuring Domestic Output and National Income
Macroeconomics - ECO 2013 Fall 2005 – 1 Term August 24 – December 16, 2005.
07 Measuring Domestic Output and National Income McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.
7 - 1 Copyright McGraw-Hill/Irwin, 2005 Assessing the Economy’s Performance Gross Domestic Product Expenditures Approach Income Approach Other National.
1 Chapter 15 Gross Domestic Product Key Concepts Key Concepts Summary Practice Quiz Internet Exercises Internet Exercises ©2002 South-Western College Publishing.
Measuring a Nation’s Income
Measuring Domestic Output & National Income
Measuring the Economy. The Economy as a Circular Flow Resources FirmsHouseholds Goods and Services Expenditures Income.
Chapter 20 : The Measurement of National Income Copyright © 2014 Pearson Canada Inc.
Chapter 7 Chapter 7 Measuring Domestic Output, National Income & Price Level.
24 Measuring Domestic Output and National Income McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.
© 2008 Pearson Addison-Wesley. All rights reserved 2-1 Chapter Outline National Income Accounting: The Measurement of Production, Income, and Expenditure.
Gross Domestic Product (GDP) What is Gross Domestic Product and how we measure it? Why is this measure important? What are the definitions of the major.
National Income Accounts and Balance of Payments Accounting.
Income and Spending: The Circular Flow Ways to Measure GDP Circular Flow.
1 20 C H A P T E R © 2001 Prentice Hall Business PublishingEconomics: Principles and Tools, 2/eO’Sullivan & Sheffrin Measuring a Nation’s Production and.
Income Approach National Income Accounting. Two Methods of Calculating GDP There are two methods of calculating GDP: the expenditure approach and the.
CHAPTER 24 Tracking the Macroeconomy. 2 The National Accounts  Almost all countries calculate a set of numbers known as the national income and product.
© 2007 Worth Publishers Essentials of Economics Krugman Wells Olney Prepared by: Fernando & Yvonn Quijano.
GDP : Gross Domestic Product
Measurement Of National Income – An Overview Flow of Product Approach Components of GNP GNP = Private Consumption (C) + Gross Private Domestic Investment.
7 McGraw-Hill/IrwinCopyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved. Measuring Domestic Output and National Income.
Eco 200 – Principles of Macroeconomics Chapter 7: National Income Accounting.
No 03. Chapter 2 Measuring Macroeconomic Variables.
National Income Accounting How Do We Measure The Size and Health of an Economy?
Economic Environment Analysis
Measuring Domestic Output, National Income, and the Price Level CH 7 *
Measuring Domestic Output, National Income, and the Price Level 7 C H A P T E R.
GDP and the CPI: Tracking the Macroeconomy Chapter 7 THIRD EDITIONECONOMICS and MACROECONOMICS MACROECONOMICS By Nimantha Manamperi.
MEASURING DOMESTIC OUTPUT AND NATIONAL INCOME Pertemuan 4 Matakuliah: J0594-Teori Ekonomi Tahun: 2009.
When you have completed your study of this chapter, you will be able to C H A P T E R C H E C K L I S T Define GDP and explain why the value of production,
Lecture 2. Gross National Product The market value of the goods and services produced within a given period by nationals (residents of a nation). It includes.
National Income Concept and Measurement
Economic growth Macroeconomics 1. Fundamental macroeconomic indicators Economic growth Unemployment Inflation 2.
7 - 1 Copyright McGraw-Hill/Irwin, 2002 Importance of Macroeconomic Measurement Gross Domestic Product Expenditures Approach Income Approach Other National.
Chapter 7 Measuring Domestic Output and National Income Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without.
National Income Accounting Chapter #2. Introduction Why do we study the national income accounts? 1. Provides formal structure for macroecon theory models.
All Rights Reserved PRINCIPLES OF ECONOMICS Third Edition © Oxford Fajar Sdn. Bhd. ( T), – 1.
Copyright  2006 McGraw-Hill Australia Pty Ltd PPTs t/a Macroeconomics 2e by Dornbusch, Bodman, Crosby, Fischer, Startz Slides prepared by Monica Keneley.
Measuring the Macroeconomy
4 GDP & National income accounting
ECN 200: Introduction to Economics Macroeconomic Aggregates
Measuring Domestic Output,
Gross Domestic Product
Gross Domestic Product and other Indicators
الناتج المحلي الإجمالي مفاهيـم وطرق القياس
National Income Accounting
Other National Accounts
Presentation transcript:

Chapter Two National Income Accounting Gross Domestic Product and Gross National Product 1. Calculating GDP Final goods and value added current output market prices Gross Domestic Product and Gross National Product 1. Calculating GDP Final goods and value added current output market prices 2. GDP and GNP 2. GDP and GNP Real and Nominal GDP (see table 2-3) Real and Nominal GDP (see table 2-3)

Price Indexes 1. The GDP deflator ---is the ratio of nominal GDP in a given year to real GDP of that year 2. The Consumer Price Index (CPI)--- measures the cost of buying a fixed basket of goods and services representative of the purchases of urban consumers. 3. The Producer Price Index (PPI)----raw materials and semi-finished goods. Price Indexes 1. The GDP deflator ---is the ratio of nominal GDP in a given year to real GDP of that year 2. The Consumer Price Index (CPI)--- measures the cost of buying a fixed basket of goods and services representative of the purchases of urban consumers. 3. The Producer Price Index (PPI)----raw materials and semi-finished goods.

From GDP to Personal Disposable Income 1. GDP - Capital consumption allowance 2. NDP - Indirect taxes 3. NI - corporate profits -social insurance contributions + government and business transfers to persons + interest and dividends 4. PI - personal tax and non-tax payments 5. PDI ≡ consumption + saving From GDP to Personal Disposable Income 1. GDP - Capital consumption allowance 2. NDP - Indirect taxes 3. NI - corporate profits -social insurance contributions + government and business transfers to persons + interest and dividends 4. PI - personal tax and non-tax payments 5. PDI ≡ consumption + saving

Outlays and Components of GDP( Fig2-1) 1. Demand components (from the view of expenditures) A. Consumption B. Investment C. Government D. Net exports Total Demand for GDP(or Y) = C+I+G+NX Outlays and Components of GDP( Fig2-1) 1. Demand components (from the view of expenditures) A. Consumption B. Investment C. Government D. Net exports Total Demand for GDP(or Y) = C+I+G+NX

2. Payments to factors of production (from the view of income) A. Labor B. Capital C. Profit About 3/4 of factors payments are payments to labor. Most of the remainder goes to pay capital. In oil-extraction economies, natural resources are a dominant factor of production. PDI= GDP + net factor income from abroad - depreciation - retained earnings + transfers - taxes

The Circulation of the Macroeconomic System The Circulation of the Macroeconomic System 1. Simple Economy HouseholdFirm Factors Goods & Services Expenditure Payoffs

2. Simple Economy plus Government HouseholdFirm Factors Goods & Services Expenditure Payoffs Government Taxes G purchases TR Public Goods

2. Four Sectors of Economy HouseholdFirm Factors Goods & Services Expenditure Payoffs Government Taxes G purchases TR Public Goods Foreign Firm Foreign HH Import Export Money outflow Money inflow

Some Important Identities 1. A Simple Economy (no government and foreign trade ) Demand for: ( GDP) Y≡ C+I Income from : ( GDP) Y≡ C+S ∴ C+I ≡ Y≡ C+S and I ≡ Y - C≡ S that is I ≡ S Some Important Identities 1. A Simple Economy (no government and foreign trade ) Demand for: ( GDP) Y≡ C+I Income from : ( GDP) Y≡ C+S ∴ C+I ≡ Y≡ C+S and I ≡ Y - C≡ S that is I ≡ S

2. Reintroducing the government and foreign trade Demand : Y = C + I + G + NX Income : Y = YD + TA - TR ∵ C + S ≡ YD ∴ C + S ≡ YD ≡ Y + TR - TA ∴ S - I ≡ (G + TR - TA) + NX 3. Saving, Investment, Government Budget, and Trade