1 / 12

National Income Accounting

National Income Accounting. Taking the Temperature of the Economy. Gross Domestic Product. All final goods and services produced within the nation 3 requirements Final goods Produced during that time period Produced within the nation’s borders. Does it Belong in GDP?. 3 requirements

akiva
Download Presentation

National Income Accounting

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. National Income Accounting Taking the Temperature of the Economy

  2. Gross Domestic Product • All final goods and services produced within the nation • 3 requirements • Final goods • Produced during that time period • Produced within the nation’s borders

  3. Does it Belong in GDP? • 3 requirements • Final goods • In time frame • In the country • Money paid by shoppers in New York for Corn Grown in Iowa • Money paid by a computer factory in New Mexico for computer chips produced in California • Money paid by shoppers in Florida for jeans manufactured in Mexico by a company headquartered in North Carolina • Fees charged to patients by a dentist in Texas • Cost of processing wood pulp into paper at a factory in Maine • Money paid by buyers in Indiana for cars made by a Japanese Company at a factory in Kentucky

  4. Calculating the GDP • How should we do it? • Income Approach • Expenditures Approach • Group into 4 sectors of the Economy

  5. GDP = C… • Consumption • Spending by households • Durable Goods • Non-Durable Goods • Services

  6. GDP = C + I… • Investment • Business Spending • Fixed Investment • New construction • Capital Goods • Inventory Investment

  7. GDP = C + I + G… • Government Spending • Goods and services • Transfer Payments are not included • Social Security • Unemployment

  8. GDP = C + I + G + (X-M) • Net Exports • Exports - Imports • Why?

  9. Checkpoint Questions • Durable goods, non-durable goods and services are all part of? • How do you calculate net exports? • Why is social security not included in government spending figures?

  10. GDP Isn’t Perfect • GDP does NOT measure • Nonmarket Activities • Underground Economy • Quality of Life After sifting all this information, Greenfield concludes that the total value of underground economic activity in the United States was $337 billion in 1990 (6.2 percent of GDP). Of this, about $268 billion is estimated to be from unreported legal-source income, and the rest from illegal activities. Such a percentage would put the U.S. underground economy slightly below the median estimate for the major industrial countries. -Invisible, Outlawed and Untaxed: America's Underground Economy

  11. Justin WolfersFreakonomics Blog • http://www.youtube.com/watch?v=77IdKFqXbUY&feature=player_embedded

  12. Do we need a new measure?

More Related