credit market and review

credit market and review - Credit Market and Review Pamela...

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Unformatted text preview: Credit Market and Review Pamela Labadie Fall 2010 1 National Income Accounting There are four basic components of aggregate demand in an economy: 1. Government purchases of goods and services G : It excludes transfer payments and payment of interest on debt. G is split into two categories: federal and state and local. Since 1996, federal expenditures have been split into capital expenditures and current (non capital) expenditures. Federal spending is also split into national defense and nondefense. (a) Government saving S g : the government surplus is S g = T- TR- INT- G. (1) where T is tax revenue, TR is transfer payments and INT is interest paid on debt. The governments net income is T- TR- INT. (b) Government deficit D is D =- S g = G + TR + INT- T. The primary government deficit is defined as Primary deficit = G + TR- T. 2. Investment I : equal to fixed investment and change in private inventories. Fixed investment equals nonresidential investment in structures, equipment and software plus residential investment. 3. Net Exports NX : net exports equals NX = Exports- Imports . 4. Consumption C : consists of durable goods, nondurable goods, and services. It doesnt include expenditures on housing. 1 1960 1970 1980 1990 2000 2008 2009 Gross Domestic Product 100 100 100 100 100 100 100 Consumption 63.0 62.4 63.0 66.1 68.8 70.1 70.8 Durable Goods 8.7 8.7 8.1 8.6 9.2 7.6 7.3 Nondurable Goods 25.0 22.0 20.6 17.1 15.5 16.0 15.6 Services 29.4 31.7 34.3 40.4 43.9 46.6 48.0 Investment 15.0 14.7 17.2 14.8 17.8 14.8 11.3 Nonresidential 9.4 10.5 13.0 10.7 12.7 11.7 9.7 Residential 5.0 4.0 4.4 3.9 4.5 3.3 2.5 Change in inventories 0.6 0.2-0.2 0.3 0.5-.02-0.9 Net Exports 0.8 0.4-0.5-1.3-3.8-4.9-2.7 Exports 5.1 5.8 10.1 9.5 11.0 12.7 11.2 Exports - goods 3.9 4.3 8.1 6.8 7.9 8.8 7.5 Exports - services 1.3 1.5 2.0 2.7 3.1 3.9 3.6 Imports 4.3 5.4 10.5 10.9 14.8 17.6 13.9 Import - goods 2.9 3.9 8.9 8.8 12.5 14.7 11.2 Import - services 1.4 1.4 1.6 2.1 2.3 2.9 2.7 Government 21.2 22.5 20.3 20.4 17.4 20.0 20.6 Federal 12.2 10.9 8.7 8.7 5.8 7.5 8.1 National defense 10.1 8.4 6.0 6.4 3.7 5.1 5.5 Nondefense 2.0 2.5 2.7 2.3 2.1 2.4 2.6 State and Local 9.0 11.6 11.6 11.6 11.611....
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This note was uploaded on 02/01/2011 for the course ECON 121 taught by Professor Labadie during the Fall '10 term at GWU.

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credit market and review - Credit Market and Review Pamela...

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