Income, and Expenditure
Gross Domestic Product
Saving and Wealth
Real GDP, Price
Indexes, and InflationInterest Rates
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Презентация на тему The measurement and structure of the national economy. (Chapter 2)
Содержание
- 2. Chapter OutlineNational Income Accounting: The Measurement of
- 3. National Income AccountingNational income accounts: an accounting
- 4. National Income AccountingThe national income accounts is
- 5. National Income Accounting (continued)The income approach measures
- 6. National Income AccountingJuice business example shows that
- 7. National Income AccountingWhy are the three approaches
- 8. Gross Domestic ProductThe product approach to measuring
- 9. Gross Domestic ProductMarket value: allows adding together
- 10. Gross Domestic ProductNewly produced: counts only things produced in the given period; excludes things produced earlier
- 11. Gross Domestic ProductFinal goods and servicesDon’t count
- 12. Gross Domestic ProductFinal goods and servicesInventory investment
- 13. Gross Domestic ProductGNP vs. GDPGNP (gross national
- 14. Gross Domestic ProductGNP vs. GDPExample: Engineering revenues
- 15. Gross Domestic ProductThe expenditure approach to measuring
- 16. Gross Domestic ProductThe expenditure approach to measuring
- 17. Gross Domestic ProductThe expenditure approach to measuring
- 18. Gross Domestic ProductThe expenditure approach to measuring
- 19. Gross Domestic ProductThe expenditure approach to measuring
- 20. Table 2.1 Expenditure Approach to Measuring GDP in the United States, 2005
- 21. Gross Domestic ProductThe income approach to measuring
- 22. Gross Domestic ProductThe income approach to measuring
- 23. Table 2.2 Income Approach to Measuring GDP in the United States, 2005
- 24. Saving and WealthWealth Household wealth = a
- 25. Saving and WealthMeasures of aggregate savingSaving =
- 26. Saving and WealthMeasures of aggregate savingGovernment saving
- 27. Saving and WealthMeasures of aggregate savingNational savingNational
- 28. Saving and WealthThe uses of private savingS
- 29. Saving and WealthThe uses of private saving
- 30. Saving and WealthRelating saving and wealthStocks and
- 31. Saving and WealthRelating saving and wealthNational wealth:
- 32. Saving and WealthRelating saving and wealthNational wealth:
- 33. Summary 1 Measures of the Aggregate Savings
- 34. Saving and WealthApplication: Wealth Versus SavingThe personal
- 35. Figure 2.1 Personal Saving Rate, 1947-2006
- 36. Saving and WealthApplication: Wealth Versus SavingWe might
- 37. Figure 2.2 Personal Saving Rate Reported by the Government At Different Vintage Dates, 1995-2006
- 38. Saving and WealthApplication: Wealth Versus SavingWe might
- 39. Figure 2.3 Annual change in net worth divided by disposable personal income, 1953-2006
- 40. Real GDP, Price Indexes, and Inflation Real
- 41. Real GDP, Price Indexes, and Inflation Real
- 42. Table 2.3 Production and Price Data
- 43. Table 2.4 Calculation of Real Output with Alternative Base Years
- 44. Real GDP, Price Indexes, and Inflation Price
- 45. Real GDP, Price Indexes, and Inflation Price
- 46. Real GDP, Price Indexes, and Inflation Price
- 47. Real GDP, Price Indexes, and Inflation Price
- 48. Figure 2.4 The Inflation Rate in the United States, 1960-2005
- 49. Real GDP, Price Indexes, and Inflation Price
- 50. Real GDP, Price Indexes, and Inflation Price
- 51. Real GDP, Price Indexes, and Inflation Price
- 52. Interest Rates Real vs. nominal interest ratesInterest
- 53. Interest Rates Real vs. nominal interest ratesReal
- 54. Figure 2.5 Nominal and real interest rates in the United States, 1960-2005”
- 55. Скачать презентацию
- 56. Похожие презентации
Chapter OutlineNational Income Accounting: The Measurement of Production, Income, and ExpenditureGross Domestic ProductSaving and WealthReal GDP, Price Indexes, and InflationInterest Rates
Слайд 2
Chapter Outline
National Income Accounting: The Measurement of Production,
Income, and Expenditure
Indexes, and InflationInterest Rates
Слайд 3
National Income Accounting
National income accounts: an accounting framework
used in measuring current economic activity
Three alternative approaches give
the same measurementsProduct approach: the amount of output produced
Income approach: the incomes generated by production
Expenditure approach: the amount of spending by purchasers
Слайд 4
National Income Accounting
The national income accounts is an
accounting framework used in measuring current economic activity.
The product
approach measures the amount of output produced, excluding output used up in intermediate stages of production.
Слайд 5
National Income Accounting (continued)
The income approach measures the
incomes received by the producers of output.
The expenditure approach
measures the amount of spending by the ultimate purchasers of output.
Слайд 6
National Income Accounting
Juice business example shows that all
three approaches are equal
Important concept in product approach:
value
added = value of output minus value of inputs purchased from other producers
Слайд 7
National Income Accounting
Why are the three approaches equivalent?
They
must be, by definition
Any output produced (product approach) is
purchased by someone (expenditure approach) and results in income to someone (income approach)The fundamental identity of national income accounting:
total production = total income
= total expenditure (2.1)
Слайд 8
Gross Domestic Product
The product approach to measuring GDP
GDP
(gross domestic product) is the market value of final
goods and services newly produced within a nation during a fixed period of time
Слайд 9
Gross Domestic Product
Market value: allows adding together unlike
items by valuing them at their market prices
Problem: misses
nonmarket items such as homemaking, the value of environmental quality, and natural resource depletion There is some adjustment to reflect the underground economy
Government services (that aren’t sold in markets) are valued at their cost of production
Слайд 10
Gross Domestic Product
Newly produced: counts only things produced
in the given period; excludes things produced earlier
Слайд 11
Gross Domestic Product
Final goods and services
Don’t count intermediate
goods and services (those used up in the production
of other goods and services in the same period that they themselves were produced)Final goods & services are those that are not intermediate
Capital goods (goods used to produce other goods) are final goods since they aren’t used up in the same period that they are produced
Слайд 12
Gross Domestic Product
Final goods and services
Inventory investment (the
amount that inventories of unsold finished goods, goods in
process, and raw materials have changed during the period) is also treated as a final goodAdding up value added works well, since it automatically excludes intermediate goods
Слайд 13
Gross Domestic Product
GNP vs. GDP
GNP (gross national product)
= output produced by domestically owned factors of production
GDP
= output produced within a nationGDP = GNP – NFP (2.2)
NFP = net factor payments from abroad
= payments to domestically owned factors located abroad minus payments to foreign factors located domestically
Слайд 14
Gross Domestic Product
GNP vs. GDP
Example: Engineering revenues for
a road built by a U.S. company in Saudi
Arabia is part of U.S. GNP (built by a U.S. factor of production), not U.S. GDP, and is part of Saudi GDP (built in Saudi Arabia), not Saudi GNPDifference between GNP and GDP is small for the United States, about 0.2%, but higher for countries that have many citizens working abroad
Слайд 15
Gross Domestic Product
The expenditure approach to measuring GDP
Measures
total spending on final goods and services produced within
a nation during a specified period of timeFour main categories of spending: consumption (C), investment (I), government purchases of goods and services (G), and net exports (NX)
Y = C + I + G + NX (2.3)
the income-expenditure identity
Слайд 16
Gross Domestic Product
The expenditure approach to measuring GDP
Consumption:
spending by domestic households on final goods and services
(including those produced abroad)About 2/3 of U.S. GDP
Three categories
Consumer durables (examples: cars, TV sets, furniture, major appliances)
Nondurable goods (examples: food, clothing, fuel)
Services (examples: education, health care, financial services, transportation)
Слайд 17
Gross Domestic Product
The expenditure approach to measuring GDP
Investment:
spending for new capital goods (fixed investment) plus inventory
investmentAbout 1/6 of U.S. GDP
Business (or nonresidential) fixed investment: spending by businesses on structures and equipment and software
Residential fixed investment: spending on the construction of houses and apartment buildings
Inventory investment: increases in firms’ inventory holdings
Слайд 18
Gross Domestic Product
The expenditure approach to measuring GDP
Government
purchases of goods and services: spending by the government
on goods or servicesAbout 1/5 of U.S. GDP
Most by state and local governments, not federal government
Not all government expenditures are purchases of goods and services
Some are payments that are not made in exchange for current goods and services
One type is transfers, including Social Security payments, welfare, and unemployment benefits
Another type is interest payments on the government debt
Some government spending is for capital goods that add to the nation’s capital stock, such as highways, airports, bridges, and water and sewer systems
Слайд 19
Gross Domestic Product
The expenditure approach to measuring GDP
Net
exports: exports minus imports
Exports: goods produced in the country
that are purchased by foreignersImports: goods produced abroad that are purchased by residents in the country
Imports are subtracted from GDP, as they represent goods produced abroad, and were included in consumption, investment, and government purchases
Слайд 21
Gross Domestic Product
The income approach to measuring GDP
Adds
up income generated by production (including profits and taxes
paid to the government)National income = compensation of employees (including benefits) + proprietors’ income + rental income of persons + corporate profits + net interest + taxes on production and imports + business current transfer payments + current surplus of government enterprises
National income + statistical discrepancy = net national product
Net national product + depreciation (the value of capital that wears out in the period) = gross national product (GNP)
GNP – net factor payments (NFP) = GDP
Слайд 22
Gross Domestic Product
The income approach to measuring GDP
Private
sector and government sector income
Private disposable income = income
of the private sector = private sector income earned at home (Y or GDP) and abroad (NFP) + payments from the government sector (transfers, TR, and interest on government debt, INT) – taxes paid to government (T) = Y + NFP + TR + INT – T (2.4)Government’s net income = taxes – transfers – interest payments = T – TR – INT (2.5)
Private disposable income + government’s net income = GDP + NFP = GNP
Слайд 24
Saving and Wealth
Wealth
Household wealth = a household’s
assets minus its liabilities
National wealth = sum of all
households’, firms’, and governments’ wealth within the nationSaving by individuals, businesses, and government determine wealth
Слайд 25
Saving and Wealth
Measures of aggregate saving
Saving = current
income – current spending
Saving rate = saving/current income
Private saving
= private disposable income – consumptionSpvt = (Y + NFP – T + TR + INT) – C (2.6)
Слайд 26
Saving and Wealth
Measures of aggregate saving
Government saving =
net government income – government purchases of goods and
servicesSgovt = (T – TR – INT) – G (2.7)
Government saving = government budget surplus = government receipts – government outlays
Government receipts = tax revenue (T)
Government outlays = government purchases of goods and services (G) + transfers (TR) + interest payments on government debt (INT)
Government budget deficit = – Sgovt
Simplification: count government investment as government purchases, not investment
Слайд 27
Saving and Wealth
Measures of aggregate saving
National saving
National saving
= private saving + government saving
S = Spvt +
Sgovt (2.8)= [Y + NFP – T + TR + INT – C]
+ [T – TR – INT – G]
= Y + NFP – C – G = GNP – C – G
Слайд 28
Saving and Wealth
The uses of private saving
S =
I + (NX + NFP) (2.9)
S = I + CA (2.10)
Derived
from S = Y + NFP – C – G and Y = C + I + G + NXCA = NX + NFP = current account balance
Слайд 29
Saving and Wealth
The uses of private saving
Spvt
= I + (–Sgovt) + CA
(2.11)(using S = Spvt + Sgovt)
The uses-of-saving identity—saving is used in three ways:
investment (I)
government budget deficit (–Sgovt)
current account balance (CA)
Слайд 30
Saving and Wealth
Relating saving and wealth
Stocks and flows
Flow
variables: measured per unit of time (GDP, income, saving,
investment)Stock variables: measured at a point in time (quantity of money, value of houses, capital stock)
Flow variables often equal rates of change of stock variables
Wealth and saving as stock and flow (wealth is a stock, saving is a flow)
Слайд 31
Saving and Wealth
Relating saving and wealth
National wealth: domestic
physical assets + net foreign assets
Country’s domestic physical assets
(capital goods and land)Country’s net foreign assets = foreign assets (foreign stocks, bonds, and capital goods owned by domestic residents) minus foreign liabilities (domestic stocks, bonds, and capital goods owned by foreigners)
Wealth matters because the economic well-being of a country depends on it
Слайд 32
Saving and Wealth
Relating saving and wealth
National wealth: domestic
physical assets + net foreign assets
Changes in national wealth
Change
in value of existing assets and liabilities (change in price of financial assets, or depreciation of capital goods)National saving (S = I + CA) raises wealth
Comparison of U.S. saving and investment with other countries
The United States is a low-saving country; Japan is a high-saving country
U.S. investment exceeds U.S. saving, so we have a negative current-account balance
Слайд 34
Saving and Wealth
Application: Wealth Versus Saving
The personal saving
rate has declined dramatically in recent years (Fig. 2.1)
Слайд 36
Saving and Wealth
Application: Wealth Versus Saving
We might not
need to worry about the decline in the personal
saving rate because:private saving is the relevant measure of saving
the personal saving rate may be revised upward in the future (Fig. 2.2)
Слайд 37 Figure 2.2 Personal Saving Rate Reported by the
Government At Different Vintage Dates, 1995-2006
Слайд 38
Saving and Wealth
Application: Wealth Versus Saving
We might not
need to worry about the decline in the personal
saving rate because:the personal saving rate ignores capital gains; as people’s wealth rises, their saving rate declines (Fig. 2.3)
Слайд 40
Real GDP, Price Indexes, and Inflation
Real GDP
Nominal
variables are those in dollar terms
Problem: Do changes in
nominal values reflect changes in prices or quantities?Real variables: adjust for price changes; reflect only quantity changes
Слайд 41
Real GDP, Price Indexes, and Inflation
Real GDP
Example
of computers and bicycles
Nominal GDP is the dollar value
of an economy’s final output measured at current market pricesReal GDP is an estimate of the value of an economy’s final output, adjusting for changes in the overall price level
Слайд 44
Real GDP, Price Indexes, and Inflation
Price Indexes
A price index measures the average level of prices
for some specified set of goods and services, relative to the prices in a specified base yearGDP deflator = 100 × nominal GDP/real GDP
Note that base year P = 100
Слайд 45
Real GDP, Price Indexes, and Inflation
Price Indexes
Consumer Price Index (CPI)
Monthly index of consumer prices; index
averages 100 in reference base period (1982 to 1984) Based on basket of goods in expenditure base period (2003 to 2004)
Слайд 46
Real GDP, Price Indexes, and Inflation
Price Indexes
Box 2.2 on the computer revolution and chain-weighted GDP
Choice
of expenditure base period matters for GDP when prices and quantities of a good, such as computers, are changing rapidlyBEA compromised by developing chain-weighted GDP
Now, however, components of real GDP don’t add up to real GDP, but discrepancy is usually small
Слайд 47
Real GDP, Price Indexes, and Inflation
Price Indexes
Inflation
Calculate inflation rate:
πt+1 = (Pt+1 – Pt)/Pt =
ΔPt+1/PtText Fig. 2.4 shows the U.S. inflation rate since 1960 for the GDP deflator
Слайд 49
Real GDP, Price Indexes, and Inflation
Price Indexes
Box 2.3: Does CPI inflation overstate increases in the
cost of living?The Boskin Commission reported that the CPI was biased upwards by as much as one to two percentage points per year
One problem is that adjusting the price measures for changes in the quality of goods is very difficult
Слайд 50
Real GDP, Price Indexes, and Inflation
Price Indexes
Box 2.3: Does CPI inflation overstate increases in the
cost of living?Price indexes with fixed sets of goods don’t reflect substitution by consumers when one good becomes relatively cheaper than another
This problem is known as substitution bias
Слайд 51
Real GDP, Price Indexes, and Inflation
Price Indexes
Box 2.3: Does CPI inflation overstate increases in the
cost of living?If inflation is overstated, then real incomes are higher than we thought and we’ve overindexed payments like Social Security
Latest research (July 2006) suggests bias is still 1% per year or higher
Слайд 52
Interest Rates
Real vs. nominal interest rates
Interest rate:
a rate of return promised by a borrower to
a lenderReal interest rate: rate at which the real value of an asset increases over time
Nominal interest rate: rate at which the nominal value of an asset increases over time
Слайд 53
Interest Rates
Real vs. nominal interest rates
Real interest
rate = i – π
(2.12)Text Fig. 2.5 plots nominal and real interest rates for the United States since 1960
