Lernkarten
National income identity formula ?
Y = C + I + G + NX
Y = GDP, C = private consumption, I = Investitions,
G = Gov. expend., NX = Net export
GDP (Gross Domestic Product)
what does it mesaure ?
total value of final goods and services, produced by an economy
during a particular period.
GDP can be calculated and decomposed in three ways
- Expenditure decomposition: main use of the final products
(C+I+G+NX)
- Value added decomposition: which sectors generate how much value
(diff. between revenue and expend. for intermed. products)
- Decomposition by factor incomes (capital income, labor income,
indirect taxes)
GNP (Gross national product)
measures the "total value of final goods and services
produced by productoin factors owned by domestic residents"
- diff. between GDP and GNP is net income received
from abroad (GNP = GDP + NIRA)
NIRA (net income received from abroad)
calculated by adding up the income received from all
domestically-owned foreign assets and then subtracting
the income paid on all foreing-owned domestic assets.
- GNP is very close to GDP for most countries.
- Countries that has more foreign assets than for.
liabilites is called a foreing creditor (GNP > GDP)
- Net debtor countries, with negative net foreing assets,
(GNP < GDP)
- for closed countries (GNP = GDP)
GNP = GDP + NIRA = C + I + G + NX + NIRA
CB = current acc. balance
CB = GNP - (C + I + G)
- a country that spends more than it produces
is running a current accoutn deficit (CB < 0).
- a country that produces more than it spends
has a current account surplus (CB > 0).
S (national savings)
S is defined as part of total production that is neither
consumed by individuals nor spent by Government.
S = GNP - C - G = CB + I
CB = S - I
