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Lectures in Macroeconomics- Charles W. Upton National Income Accounting.

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Presentation on theme: "Lectures in Macroeconomics- Charles W. Upton National Income Accounting."— Presentation transcript:

1 Lectures in Macroeconomics- Charles W. Upton National Income Accounting

2 Gross Domestic Product A nation's aggregate output, or Gross Domestic Product, is simply the value of all final goods and services produced in that country in a year.

3 National Income Accounting Miller’s Pizzeria

4 National Income Accounting Final and Intermediate Goods We account for only final goods. We do so by measuring value added –Wages –Payments to capital owners –Profits

5 National Income Accounting A Sample Calculation

6 National Income Accounting A Sample Calculation

7 National Income Accounting A Sample Calculation

8 National Income Accounting A Sample Calculation

9 National Income Accounting A Sample Calculation

10 National Income Accounting A Sample Calculation

11 National Income Accounting The Key Accounting Identities Value Added = Income National Income = National Product

12 National Income Accounting Does GDP Measure National Welfare? More than any other single number, GDP summarizes a nation’s well-being. However there are important omissions

13 National Income Accounting Problems GDP measures only market activities. Illegal activities are excluded Home production is excluded –Changing level of market and non-market activities GDP does not measure well being –Changes in pollution, crime and the like

14 National Income Accounting Extensions GDI=GDP

15 National Income Accounting Extensions GDI=GDP Y = C+S +T = C +I +G

16 National Income Accounting Extensions GDI=GDP Y = C+S +T = C +I +G S = I +(G-T) = I + Govt Saving

17 National Income Accounting Extensions GDI=GDP Y = C+S +T = C +I +G S = I +(G-T) = I + Govt Saving Y = C +I + G + (X-M)

18 National Income Accounting End ©2003 Charles W. Upton. All rights reserved

19 National Income Accounting Simon Kuznets 1971 Nobel Prize “For his empirically founded interpretation of economic growth ….”


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