Презентация Measuring a nations income онлайн

Содержание слайда: Measuring a Nation’s Income 23

Содержание слайда: In this chapter, look for the answers to these questions: What is Gross Domestic Product (GDP)? How is GDP related to a nation’s total income and spending? What are the components of GDP? How is GDP corrected for inflation? Does GDP measure society’s well-being?

Содержание слайда: Micro vs. Macro Microeconomics: The study of how individual households and firms make decisions, interact with one another in markets. Macroeconomics: The study of the economy as a whole. We begin our study of macroeconomics with the country’s total income and expenditure.

Содержание слайда: Income and Expenditure Gross Domestic Product (GDP) measures total income of everyone in the economy. GDP also measures total expenditure on the economy’s output of g&s.

Содержание слайда: The Circular-Flow Diagram a simple depiction of the macroeconomy illustrates GDP as spending, revenue, factor payments, and income Preliminaries: Factors of production are inputs like labor, land, capital, and natural resources. Factor payments are payments to the factors of production (e.g., wages, rent).

Содержание слайда: The Circular-Flow Diagram

Содержание слайда: The Circular-Flow Diagram

Содержание слайда: What This Diagram Omits The government collects taxes, buys g&s The financial system matches savers’ supply of funds with borrowers’ demand for loans The foreign sector trades g&s, financial assets, and currencies with the country’s residents

Содержание слайда: Gross Domestic Product (GDP) Is… …the market value of all final goods & services produced within a country in a given period of time.

Содержание слайда: Gross Domestic Product (GDP) Is… …the market value of all final goods & services produced within a country in a given period of time.

Содержание слайда: Gross Domestic Product (GDP) Is… …the market value of all final goods & services produced within a country in a given period of time.

Содержание слайда: Gross Domestic Product (GDP) Is… …the market value of all final goods & services produced within a country in a given period of time.

Содержание слайда: Gross Domestic Product (GDP) Is… …the market value of all final goods & services produced within a country in a given period of time.

Содержание слайда: Gross Domestic Product (GDP) Is… …the market value of all final goods & services produced within a country in a given period of time.

Содержание слайда: The Components of GDP Recall: GDP is total spending. Four components: Consumption (C) Investment (I) Government Purchases (G) Net Exports (NX) These components add up to GDP (denoted Y):

Содержание слайда: Consumption (C) is total spending by households on g&s. Note on housing costs: For renters, consumption includes rent payments. For homeowners, consumption includes the imputed rental value of the house, but not the purchase price or mortgage payments.

Содержание слайда: Investment (I) is total spending on goods that will be used in the future to produce more goods. includes spending on capital equipment (e.g., machines, tools) structures (factories, office buildings, houses) inventories (goods produced but not yet sold)

Содержание слайда: Government Purchases (G) is all spending on the g&s purchased by govt at the federal, state, and local levels. G excludes transfer payments, such as Social Security or unemployment insurance benefits. They are not purchases of g&s.

Содержание слайда: Net Exports (NX) NX = exports – imports Exports represent foreign spending on the economy’s g&s. Imports are the portions of C, I, and G that are spent on g&s produced abroad. Adding up all the components of GDP gives:

Содержание слайда: U.S. GDP and Its Components, 2007

Содержание слайда: A C T I V E L E A R N I N G 1 GDP and its components In each of the following cases, determine how much GDP and each of its components is affected (if at all). A. Debbie spends $200 to buy her husband dinner at the finest restaurant in Boston. B. Sarah spends $1800 on a new laptop to use in her publishing business. The laptop was built in China. C. Jane spends $1200 on a computer to use in her editing business. She got last year’s model on sale for a great price from a local manufacturer. D. General Motors builds $500 million worth of cars, but consumers only buy $470 million worth of them.

Содержание слайда: A C T I V E L E A R N I N G 1 Answers A. Debbie spends $200 to buy her husband dinner at the finest restaurant in Boston. Consumption and GDP rise by $200. B. Sarah spends $1800 on a new laptop to use in her publishing business. The laptop was built in China. Investment rises by $1800, net exports fall by $1800, GDP is unchanged.

Содержание слайда: A C T I V E L E A R N I N G 1 Answers C. Jane spends $1200 on a computer to use in her editing business. She got last year’s model on sale for a great price from a local manufacturer. Current GDP and investment do not change, because the computer was built last year. D. General Motors builds $500 million worth of cars, but consumers only buy $470 million of them. Consumption rises by $470 million, inventory investment rises by $30 million, and GDP rises by $500 million.

Содержание слайда: Real versus Nominal GDP Inflation can distort economic variables like GDP, so we have two versions of GDP: One is corrected for inflation, the other is not. Nominal GDP values output using current prices. It is not corrected for inflation. Real GDP values output using the prices of a base year. Real GDP is corrected for inflation.

Содержание слайда: EXAMPLE: Compute nominal GDP in each year: 2005: $10 x 400 + $2 x 1000 = $6,000 2006: $11 x 500 + $2.50 x 1100 = $8,250 2007: $12 x 600 + $3 x 1200 = $10,800

Содержание слайда: EXAMPLE: Compute real GDP in each year, using 2005 as the base year:

Содержание слайда: EXAMPLE: In each year, nominal GDP is measured using the (then) current prices. real GDP is measured using constant prices from the base year (2005 in this example).

Содержание слайда: EXAMPLE: The change in nominal GDP reflects both prices and quantities.

Содержание слайда: Nominal and Real GDP in the U.S., 1965-2007

Содержание слайда: The GDP Deflator The GDP deflator is a measure of the overall level of prices. Definition:

Содержание слайда: EXAMPLE: Compute the GDP deflator in each year:

Содержание слайда: A C T I V E L E A R N I N G 2 Computing GDP

Содержание слайда: A C T I V E L E A R N I N G 2 Answers

Содержание слайда: A C T I V E L E A R N I N G 2 Answers

Содержание слайда: GDP and Economic Well-Being Real GDP per capita is the main indicator of the average person’s standard of living. But GDP is not a perfect measure of well-being. Robert Kennedy issued a very eloquent yet harsh criticism of GDP:

Содержание слайда: Gross Domestic Product… “… does not allow for the health of our children, the quality of their education, or the joy of their play.

Содержание слайда: GDP Does Not Value: the quality of the environment leisure time non-market activity, such as the child care a parent provides his or her child at home an equitable distribution of income

Содержание слайда: Then Why Do We Care About GDP? Having a large GDP enables a country to afford better schools, a cleaner environment, health care, etc. Many indicators of the quality of life are positively correlated with GDP. For example…

Содержание слайда: GDP and Life Expectancy in 12 countries

Содержание слайда: GDP and Literacy in 12 countries

Содержание слайда: GDP and Internet Usage in 12 countries

Содержание слайда: CHAPTER SUMMARY Gross Domestic Product (GDP) measures a country’s total income and expenditure. The four spending components of GDP include: Consumption, Investment, Government Purchases, and Net Exports. Nominal GDP is measured using current prices. Real GDP is measured using the prices of a constant base year and is corrected for inflation. GDP is the main indicator of a country’s economic well-being, even though it is not perfect.