1 measuring a nations income professor chris adam australian graduate school of management...
TRANSCRIPT
![Page 1: 1 Measuring a Nations Income Professor Chris Adam Australian Graduate School of Management University of Sydney and University of New South Wales](https://reader036.vdocument.in/reader036/viewer/2022070305/5513be985503464b298b4873/html5/thumbnails/1.jpg)
1
Measuring a Nation’s Income
Professor Chris AdamAustralian Graduate School of ManagementUniversity of Sydney and University of New
South Wales
![Page 2: 1 Measuring a Nations Income Professor Chris Adam Australian Graduate School of Management University of Sydney and University of New South Wales](https://reader036.vdocument.in/reader036/viewer/2022070305/5513be985503464b298b4873/html5/thumbnails/2.jpg)
2
INTRODUCTION
• Macroeconomics – study of economy as a whole– Explain economic changes that affect many households, firms and markets at
once
• Consider data that are used to monitor overall economy
![Page 3: 1 Measuring a Nations Income Professor Chris Adam Australian Graduate School of Management University of Sydney and University of New South Wales](https://reader036.vdocument.in/reader036/viewer/2022070305/5513be985503464b298b4873/html5/thumbnails/3.jpg)
3
GROSS DOMESTIC PRODUCT
• GDP– Total income of everyone working in economy
– Total expenditure on economy’s output of goods and services
• For economy as a whole, income must equal expenditure
• Circular flow diagram
![Page 4: 1 Measuring a Nations Income Professor Chris Adam Australian Graduate School of Management University of Sydney and University of New South Wales](https://reader036.vdocument.in/reader036/viewer/2022070305/5513be985503464b298b4873/html5/thumbnails/4.jpg)
4
GROSS DOMESTIC PRODUCT
• GDP is… the market value … use of prices
… of all … external sales; imputation
… final … vs intermediate
… goods and services … tangibles and intangibles
… produced … current production
… within a country … vs Gross National Product
… in a given period of time. quarterly; annually
![Page 5: 1 Measuring a Nations Income Professor Chris Adam Australian Graduate School of Management University of Sydney and University of New South Wales](https://reader036.vdocument.in/reader036/viewer/2022070305/5513be985503464b298b4873/html5/thumbnails/5.jpg)
5
COMPONENTS OF GROSS DOMESTIC PRODUCT
• Algebra!
Y = C + I + G + NX
Y is GDP
C is consumption: household spending
I is investment: spending that creates future income
G is government: spending by government
NX is net exports: exports (foreign-purchased, domestic-produced g&s) minus imports (domestic-purchased, foreign-produced g&s)
![Page 6: 1 Measuring a Nations Income Professor Chris Adam Australian Graduate School of Management University of Sydney and University of New South Wales](https://reader036.vdocument.in/reader036/viewer/2022070305/5513be985503464b298b4873/html5/thumbnails/6.jpg)
6
MEASURING GDP• Three methods:
– GDP expenditure: method described above
– GDP income: sum of factor incomes, consumption of fixed capital, net indirect taxes
– GDP production: market value of g&s produced minus cost of g&s used (“intermediate production”); also called “value added”
![Page 7: 1 Measuring a Nations Income Professor Chris Adam Australian Graduate School of Management University of Sydney and University of New South Wales](https://reader036.vdocument.in/reader036/viewer/2022070305/5513be985503464b298b4873/html5/thumbnails/7.jpg)
7
DATA
![Page 8: 1 Measuring a Nations Income Professor Chris Adam Australian Graduate School of Management University of Sydney and University of New South Wales](https://reader036.vdocument.in/reader036/viewer/2022070305/5513be985503464b298b4873/html5/thumbnails/8.jpg)
8
DATA
![Page 9: 1 Measuring a Nations Income Professor Chris Adam Australian Graduate School of Management University of Sydney and University of New South Wales](https://reader036.vdocument.in/reader036/viewer/2022070305/5513be985503464b298b4873/html5/thumbnails/9.jpg)
9
DATA
![Page 10: 1 Measuring a Nations Income Professor Chris Adam Australian Graduate School of Management University of Sydney and University of New South Wales](https://reader036.vdocument.in/reader036/viewer/2022070305/5513be985503464b298b4873/html5/thumbnails/10.jpg)
10
DATA
![Page 11: 1 Measuring a Nations Income Professor Chris Adam Australian Graduate School of Management University of Sydney and University of New South Wales](https://reader036.vdocument.in/reader036/viewer/2022070305/5513be985503464b298b4873/html5/thumbnails/11.jpg)
11
DATA
![Page 12: 1 Measuring a Nations Income Professor Chris Adam Australian Graduate School of Management University of Sydney and University of New South Wales](https://reader036.vdocument.in/reader036/viewer/2022070305/5513be985503464b298b4873/html5/thumbnails/12.jpg)
12
DATA
![Page 13: 1 Measuring a Nations Income Professor Chris Adam Australian Graduate School of Management University of Sydney and University of New South Wales](https://reader036.vdocument.in/reader036/viewer/2022070305/5513be985503464b298b4873/html5/thumbnails/13.jpg)
13
DATA
![Page 14: 1 Measuring a Nations Income Professor Chris Adam Australian Graduate School of Management University of Sydney and University of New South Wales](https://reader036.vdocument.in/reader036/viewer/2022070305/5513be985503464b298b4873/html5/thumbnails/14.jpg)
14
DATA
![Page 15: 1 Measuring a Nations Income Professor Chris Adam Australian Graduate School of Management University of Sydney and University of New South Wales](https://reader036.vdocument.in/reader036/viewer/2022070305/5513be985503464b298b4873/html5/thumbnails/15.jpg)
15
DATA
![Page 16: 1 Measuring a Nations Income Professor Chris Adam Australian Graduate School of Management University of Sydney and University of New South Wales](https://reader036.vdocument.in/reader036/viewer/2022070305/5513be985503464b298b4873/html5/thumbnails/16.jpg)
16
DATA
![Page 17: 1 Measuring a Nations Income Professor Chris Adam Australian Graduate School of Management University of Sydney and University of New South Wales](https://reader036.vdocument.in/reader036/viewer/2022070305/5513be985503464b298b4873/html5/thumbnails/17.jpg)
17
REAL vs NOMINAL GDP• Increase of GDP(E) over time
– We produced more g&s at the same prices?
– We paid more for the same g&s?
– Some combination?
• Nominal GDP: value of g&s produced now using current prices
• Real GDP: value of g&s produced now using previous (unchanging) prices
![Page 18: 1 Measuring a Nations Income Professor Chris Adam Australian Graduate School of Management University of Sydney and University of New South Wales](https://reader036.vdocument.in/reader036/viewer/2022070305/5513be985503464b298b4873/html5/thumbnails/18.jpg)
18
REAL vs NOMINAL GDPNominal GDP
GDP deflator = x 100
Real GDP
• Real GDP has grown over time but not constantly
• GDP not measure “beauty of our poetry”, but can tell us if we can afford poetry
![Page 19: 1 Measuring a Nations Income Professor Chris Adam Australian Graduate School of Management University of Sydney and University of New South Wales](https://reader036.vdocument.in/reader036/viewer/2022070305/5513be985503464b298b4873/html5/thumbnails/19.jpg)
19
WHAT GDP MISSES• Leisure reduction increases GDP but may reduce well-being
• Removal of environmental regulation may increase GDP but reduce quality of environment
• Use of market prices excludes non-market activities