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macroeconomics

macroeconomics. National Income - Measurement. 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

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macroeconomics

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  1. macroeconomics National Income - Measurement

  2. 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

  3. 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

  4. GDP, income side • Payments to factors • Wages + • Profits + • Rent + • Taxes • Depreciation • Y = nDP + ΔK + T • current • C + I + G + NX = Y = nDP + ΔK + T • Statistical discrepancy

  5. GNP • GDP = within Canada • GNP = by/to Canadian nationals • GDP, how well an economy is doing • GNP, how well the citizens are • Migration • Remittances

  6. 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

  7. 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

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