Ch.13_wi2015(1) - Econ171 Dongwon Lee Lecture 1 Ch.13...

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Econ171, Dongwon Lee 1 Lecture 1: Ch.13 National Income and Balance of Payments I. The National Income Accounts 1. What is national income account? • Measures national income that results from production and expenditure . • The amount of expenditure by buyers = the amount of income for sellers = the value of production • Thus, at the national level, income = output . 2. Measures of national income: GNP vs. GDP Gross National Product ( GNP ): the value of all final goods and services produced by a
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Econ171, Dongwon Lee 2 nation’s factors of production (such as workers, physical capital, natural resources, etc.) in a given time period Can we say that “National income is the income earned by a nation’s factors of production”? Another widely used economic statistic GDP (Gross Domestic Product) measures the final value of all goods and services produced within a country in a given time period. 3. Compositions of GNP Since GNP measures national income which is equal to aggregate expenditure on final goods and services, Y = C + I + G + (EX – IM) where Y = GNP, C = consumption, G = government purchases, EX = exports, IM = imports, (EX – IM) = net exports or current account balance (CA).
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Econ171, Dongwon Lee 3 Fig.1: U.S. GNP and its Components
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