0321316762_IM_12 - Chapter 12 National Income Accounting...

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Chapter 12 National Income Accounting and the Balance of Payments T Chapter Organization The National Income Accounts National Product and National Income Capital Depreciation, International Transfers, and Indirect Business Taxes Gross Domestic Product National Income Accounting in a Closed Economy Consumption Investment Government Purchases The National Income Identity for an Open Economy An Imaginary Open Economy The Current Account and Foreign Indebtedness Saving and the Current Account Private and Government Savings Case Study: Government Deficit Reduction May Not Increase the Current Account Surplus The Balance of Payments Accounts Examples of Paired Transactions The Fundamental Balance of Payments Identity The Current Account, Once Again The Capital Account The Financial Account The Statistical Discrepancy Official Reserve Transactions Case Study: The Assets and Liabilities of the World’s Biggest Debtor Summary
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58 Krugman/Obstfeld • International Economics: Theory and Policy, Seventh Edition T Chapter Overview This chapter introduces the international macroeconomics section of the text. The chapter begins with a brief discussion of the focus of international macroeconomics. You may want to contrast the type of topics studied in international trade, such as the determinants of the patterns of trade and the gains from trade, with the issues studied in international finance, which include unemployment, savings, trade imbalances, and money and the price level. You can then “preview” the manner in which the theory taught in this section of the course will enable students to better understand important and timely issues such as the U.S. trade deficit, the experience with international economic coordination, European Economic and Monetary Union, and the financial crises in Asia and other developing countries. The core of this chapter is a presentation of national income accounting theory and balance of payments accounting theory. A solid understanding of these topics proves useful in other parts of this course when students need to understand concepts such as the intertemporal nature of the current account or the way in which net export earnings are required to finance external debt. Students will have had some exposure to closed economy national income accounting theory in previous economics courses. You may want to stress that GNP can be considered the sum of expenditures on final goods and services or, alternatively, the sum of payments to domestic factors of production. You may also want to explain that separating GNP into different types of expenditures allows us to focus on the different determinants of consumption, investment, government spending, and net exports.
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This note was uploaded on 05/18/2010 for the course ECON 203 taught by Professor Kim during the Spring '10 term at Korea University.

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0321316762_IM_12 - Chapter 12 National Income Accounting...

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