bcc macro 17 ch 6,8,9 c

bcc macro 17 ch 6,8,9 c - 6 Measuring Domestic Output and...

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6 Measuring Domestic Output and National Income
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Assessing Economy’s Performance National Income Accounting Bureau of Economic Analysis Gross Domestic Product (GDP) A Monetary Measure Avoid Multiple Counting Intermediate Goods Final Goods Value Added Exclude Nonproduction Transactions
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Assessing Economy’s Performance Financial Transactions Excluded Public Transfer Payments Private Transfer Payments Stock (and Bond) Market Transactions Second Hand Sales
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Two Approaches to GDP Income Approach Wages Rental Incomes Interest Incomes Profits Expenditure Approach Final-Product or Value-Added The Sum of the Money Spent to Buy the Output
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Two Approaches to GDP Expenditure Approach Income Approach G D P = = + Consumption by Households Investment by Businesses Government Purchases Expenditures By Foreigners + + + + + Wages Rents Interest Profits Statistical Adjustments +
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Expenditure Approach Personal Consumption Expenditures Durable Consumer Goods Nondurable Consumer Goods Consumer Expenditures for Services Gross Private Domestic Investment Machinery, Equipment, and Tools All Construction Changes in Inventories Noninvestment Transactions C I g
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Expenditure Approach January 1 Year’s GDP December 31 Consumption & Government Spending Depreciation Net Investment Gross Investment Stock of Capital Increased Stock of Capital Gross Investment Depreciation Net Investment - =
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Expenditure Approach Government Purchases Expenditures for Goods and Services Expenditures for Social Capital Net Exports X n = Exports ( X ) – Imports ( M ) Putting It All Together: GDP = C + I + G + X n GDP= $8,746 + 2,105 + 2,363 - 727 = $12,487 in 2005 G X n
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GDP Approaches Compared Compensation Rents Interest Proprietor’s Income Corporate Profits Taxes on Production and Imports National Income Net Foreign Factor Income Statistical Discrepancy Consumption of Fixed Capital Gross Domestic Product $ 7125 73 498 939 1352 917 $10,904 -34 43 1574 $ 12,487 Personal Consumption ( C ) Gross Private Domestic Investment ( I g ) Government Purchases ( G ) Net Exports ( X n ) Gross Domestic Product Accounting Statement for the U.S. Economy, 2005 in Billions Receipts Expenditures Approach Allocations Income Approach $ 8746 2105 2363 -727 $ 12,487
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The Income Approach Compensation of Employees Rents Interest Proprietor’s Income Corporate Profits Corporate Income Taxes Dividends Undistributed Corporate Profits Taxes on Production and Imports
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The Income Approach From National Income to GDP -- Net Foreign Factor Income + Statistical Discrepancy + Consumption of Fixed Capital DI = C + S W 6.1
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The Income Approach Gross Domestic Product ( GDP ) Consumption of Fixed Capital Net Domestic Profit ( NDP ) Statistical Discrepancy Net Foreign Factor Income National Income ( NI ) Taxes on Production and Imports Social Security Contributions Corporate Income Taxes Undistributed Corporate Profits Transfer Payments Personal Income ( PI ) Personal Taxes Disposable Income ( DI ) $ 12,487 -1,574 $ 10,913 -43 34 $ 10,904 -917 -871 -378 -460 +1,970 $ 10,248 -1,210 $ 9,038 Income Relationships – United States, 2005
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