101-2011-L4

101-2011-L4 - Econ 101 Lecture 4 Measurement of Economic...

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Unformatted text preview: Econ 101 Lecture 4 Measurement of Economic Activities Today n GDP by Incomes n Price Indexes n Business Cycle Measurement 2. GDP by Incomes n A dollar spent by someone is a dollar earned by someone n Two main inputs in production n Labor n Capital GDP = sum of all incomes from production 2. GDP by Incomes 2. GDP by Incomes Labor and Capital Income n Some items are clearly capital or labor income n Labor Income: n Compensation of Employees n Capital Income: n Corporate Profits n Depreciation n Some items are ambiguous n Proprietors income 2. GDP by Incomes Capital Share a n What fraction a of GDP goes to capital owners? n Solve for a n This procedure yields a stable estimate of a = 0.32 Income Ambiguous * Income Capital Income Total * a a + = 2. GDP by Incomes Capital Share a Capital Share 0.1 0.2 0.3 0.4 0.5 0.6 0.7 1 9 2 9 1 9 3 2 1 9 3 5 1 9 3 8 1 9 4 1 1 9 4 4 1 9 4 7 1 9 5 1 9 5 3 1 9 5 6 1 9 5 9 1 9 6 2 1 9 6 5 1 9 6 8 1 9 7 1 1 9 7 4 1 9 7 7 1 9 8 1 9 8 3 1 9 8 6 1 9 8 9 1 9 9 2 1 9 9 5 1 9 9 8 2 1 2 4 2 7 2. GDP by Incomes Capital Share a n Why is this important?...
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101-2011-L4 - Econ 101 Lecture 4 Measurement of Economic...

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