Net exports of goods and services government

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Net exports of goods and services Government consumption expenditures and gross investment Class 1
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Income Approach What is sold is redistributed to someone. GDP = The total income earned by the factors of production owned by a country²s citizens. De±nition GDP Wages+Pro±ts Class 1
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4.9 505.5 Rental income 11.3 1,161.5 Net interest - 0.0 0.9 1.3 8.7 65.1 - 3.0 91.1 134.2 889.6 6,687.6 Surplus of government enterprises Net business transfer payments 7.9 809.3 Indirect taxes minus subsidies Corporate profits Proprietors’ income Compensation of employees 100.0 10,275.9 National Income PERCENTAGE OF NATIONAL INCOME BILLIONS OF DOLLARS TABLE U.S. National Income, 2004 Class 1
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Some Issues with GDP 1 Government : All government purchases of goods and services are classi±ed as ±nal goods. If they were bought by the private sector, they would have been classi±ed as intermediate goods and would have been excluded from GDP. (public services to the private sector). Production of the State is not counted in GDP. Education is counted by the cost of he teachers, not the value added generated. Class 1
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Some Issues with GDP 1 Government : All government purchases of goods and services are classi±ed as ±nal goods. If they were bought by the private sector, they would have been classi±ed as intermediate goods and would have been excluded from GDP. (public services to the private sector). Production of the State is not counted in GDP. Education is counted by the cost of he teachers, not the value added generated. 2 Home production is not in GDP Class 1
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Some Issues with GDP 1 Government : All government purchases of goods and services are classi±ed as ±nal goods. If they were bought by the private sector, they would have been classi±ed as intermediate goods and would have been excluded from GDP. (public services to the private sector). Production of the State is not counted in GDP. Education is counted by the cost of he teachers, not the value added generated. 2 Home production is not in GDP 3 Depreciation (replacement because of obsolescence) Class 1
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Some Issues with GDP 1 Government : All government purchases of goods and services are classi±ed as ±nal goods. If they were bought by the private sector, they would have been classi±ed as intermediate goods and would have been excluded from GDP. (public services to the private sector). Production of the State is not counted in GDP. Education is counted by the cost of he teachers, not the value added generated. 2 Home production is not in GDP 3 Depreciation (replacement because of obsolescence) 4 Pollution and environmental issues Class 1
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Class 1
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In°ation The price level : The average price in e or $ evolves through times. The average price level is an average of a selection of goods. One often consider the price of an average consumption basket. But, many di∕erent price indexes. De±nition The net In°ation rate is the growth rate of the price level : π t = P t + 1 ° P t P t Class 1
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Class 1
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Nominal and real GDP : The most important is the number of apples and cars, not their value in e .
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