Chap_23MeasuringGDP

Country USA Japan Germany Mexico Brazil Russia Indonesia Real GDP Per Person (1997) $29,010 24,070 21,260 8,370 6,480 4,370 3,490 Life Expectancy 77 years 80 77 72 67 67 65 Adult Literacy 99% 99 99 90 84 99 85
Imagine
an economy that produces only two goods, cheese and crackers. Calculate GDP for this economy if cheese retails for $3 a pound and 10 pounds are produced while crackers sell for $2 a pound and 20 pounds are produced.
GDP (Y ) is the sum of the following:

Consumption (C) 个人或家庭 Investment (I) 企业 Government Purchases (G)政府采购 Net Exports (NX)出口减去进口
Y = C + I + G + NX
Consumption 68 %
Measuring Economic Growth
We use real GDP to calculate the economic growth rate. The economic growth rate is the percentage change in the quantity of goods and services produced from one year to the next. We measure economic growth so we can make: （1）Economic welfare comparisons （2）International welfare comparisons （3）Business cycle forecasts
What Is Counted and Not Counted in GDP?
GDP
includes all items produced in the economy and sold legally in markets. GDP excludes services that are produced and consumed at home and that never enter the marketplace. Caring labor, the work that is normally produced by women. Because GDP does not count it, it diminishes its importance. GDP also excludes black market items, such as illegal drugs.
8,000
(Periods of falling real GDP)
7,000
6,000
5,000
4,000
3,000 1970
1975
1980
1985
1990
1995
2000
Hawaii GSP (1997)



This pie chart shows how Hawaii’s Gross State Product is broken down. Notice how the visitor industry is relatively high (21%). Refer to Time Series of Hawaii GSP. Refer to comparison of USA and Hawaii GDP and GSP.
Real versus Nominal GDP

Nominal GDP values the production of goods and services at current prices. Real GDP values the production of goods and services at constant prices. 当经济增长率是10%，通货膨胀率也是10%时， 则真实GDP是0%。 Nominal GDP增长的情况：一是真实GDP增长 了；二是产品的价格增长了。
China
India Pakistan Bangladesh Nigeria
3,130
1,670 1,560 1,050 920
70
63 64 58 50
83
53 41 39 59
Which of the following will have an effect on GDP?
A.
You lose $50 betting with a friend. B. You fix your brother’s car without buying any new parts. C. Your father’s firm makes computers and exports them to Australia. D. You buy 1,000 shares of stock in a corporation, E. Your wealthy uncle buys a painting by Picasso.
The Circular-Flow Diagram
Revenue Goods & Services sold
Market for Goods and Services
Spending Goods & Services bought
Firms
Households
Inputs for production Wages, rent, ation’s Income
Chapter 10 or 23
The Economy’s Income and Expenditure
When
judging whether the economy is doing well or poorly, it is natural to look at the total income that everyone in the economy is earning. To have this number make sense, it is also best to look at income per person.


Say’s Law-Supply creates it’s own demand This process can be seen using a Circular Flow Diagram.
Gross Domestic Product
Gross
domestic product (GDP) is a measure of the income and expenditures of an economy. Definition: It is the total market value of all final goods and services produced within a country in a given period of time. How much is the current GDP?
Market for Factors of Production
Labor, land, and capital Income
The Measurement of GDP
GDP is: the market value of all final goods and services produced within a country in a given period of time.
Other Measures of Income
Gross
National Product (GNP) Net National Product (NNP) National Income Personal Income Disposable Personal Income
The Components of GDP
Measuring Economic Growth
Business
Cycle Forecasts
Real GDP is used to measure business cycle fluctuations. These fluctuations are probably accurately timed but the changes in real GDP probably overstate the changes in total production and people’s welfare caused by business cycles.

Deflating the GDP Balloon
Real GDP and the Price Level

We use the GDP Deflator to take the air out of Nominal GDP.
Real GDP in the United States
Billions of 1992 Dollars
The Economy’s Income and Expenditure

For an economy as a whole, income must equal expenditure because: