Download Measuring a Nation`s Income

© 2007 Thomson South-Western
Measuring a Nation’s Income
Microeconomics is the study of how individual
households and firms make decisions and how
they interact with one another in markets.
Macroeconomics is the study of the economy as
a whole. Its goal is to explain the economic
changes that affect many households, firms,
and markets at once.
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Measuring a Nation’s Income
Macroeconomics answers questions like the
following:
 Why is average income high in some countries and
low in others?
 Why do prices rise rapidly in some time periods
while they are more stable in others?
 Why do production and employment expand in
some years and contract in others?
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THE ECONOMY’S INCOME AND
EXPENDITURE
• When judging whether the economy is doing
well or poorly, it is natural to look at the total
income that everyone in the economy is
earning.
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THE ECONOMY’S INCOME AND
EXPENDITURE
• For an economy as a whole, income must
equal expenditure because:
– Every transaction has a buyer and a seller.
– Every dollar of spending by some buyer is a dollar
of income for some seller.
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THE MEASUREMENT OF GROSS
DOMESTIC PRODUCT(國內生產毛額)
• Gross domestic product (GDP) is a measure of
the income and expenditures of an economy.
• GDP is the total market value of all final goods
and services produced within a country in a
given period of time.
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THE MEASUREMENT OF GROSS
DOMESTIC PRODUCT
• The equality of income and expenditure can be
illustrated with the circular-flow diagram.
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Figure 1 The Circular-Flow Diagram
MARKETS
FOR
GOODS AND SERVICES
•Firms sell
Goods
•Households buy
and services
sold
Revenue
Wages, rent,
and profit
Goods and
services
bought
HOUSEHOLDS
•Buy and consume
goods and services
•Own and sell factors
of production
FIRMS
•Produce and sell
goods and services
•Hire and use factors
of production
Factors of
production
Spending
MARKETS
FOR
FACTORS OF PRODUCTION
•Households sell
•Firms buy
Labor, land,
and capital
Income
= Flow of inputs
and outputs
= Flow of dollars
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THE MEASUREMENT OF GROSS
DOMESTIC PRODUCT
• “GDP is the Market Value . . .”
– Goods and services are valued at market prices.
• “. . . Of All. . .”
– It includes all items produced in the economy and legally
sold in markets
• “. . . Final . . .”
– It records only the value of final goods(最終財貨), not
intermediate goods (中間財,the value is counted only once).
• “. . . Goods and Services . . .”
– It includes both tangible goods (food, clothing, cars) and
intangible services (haircuts, housecleaning, doctor visits).
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THE MEASUREMENT OF GROSS
DOMESTIC PRODUCT
• “. . . Produced . . .”
– It includes goods and services currently produced, not
transactions involving goods produced in the past.
• “ . . . Within a Country . . .”
– It measures the value of production within the geographic
confines of a country.
• “. . . In a Given Period of Time.”
– It measures the value of production that takes place within
a specific interval of time, usually a year or a quarter (three
months).
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THE COMPONENTS OF GDP
• What Is Not Counted in GDP?
– GDP excludes most items that are produced and
consumed at home and that never enter the
marketplace.
– It excludes items produced and sold illicitly, such
as illegal drugs.
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THE COMPONENTS OF GDP
GDP (Y) is the sum of the following:




Consumption (民間消費, C)
Investment (民間投資, I)
Government Purchases (政府支出, G)
Net Exports (淨出口, NX)
Y = C + I + G + NX
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THE COMPONENTS OF GDP
• Consumption (C):
－The spending by households on goods and
services, with the exception of purchases of new
housing.
• Investment (I):
－The spending on capital equipment, inventories,
and structures, including new housing.
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THE COMPONENTS OF GDP
• Government Purchases (G):
– The spending on goods and services by local, state,
and federal governments.
– Does not include transfer payments because they
are not made in exchange for currently produced
goods or services.
– It includes government consumption and gross
investment
• Net Exports (NX):
– Exports minus imports.
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Table 1 U.S. GDP and Its Components in 2004
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U.S. GDP and Its Components (2004)
Government Purchases
15%
Net Exports
Investment
-5 %
16%
Consumption
70%
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2009年台灣國內生產毛額及其組成
總和(新台幣百萬元)
平均每人(新台幣)
國內生產毛額 (GDP)
12,527,396
541,195
100.0%
民間消費 (C)
7,619,327
329,162
60.8%
政府消費 (G)
1,607,212
69,433
12.8%
國內投資（固定資本形成+存貨增加,I）
2,160,899
93,353
17.3%
淨輸出（貨品服務輸出-貨品服務輸入,NX）
1,139,958
49,247
9.1%
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2009年台灣國內生產毛額及其組成
9%
民間消費 (C)
17%
政府消費 (G)
61%
13%
國內投資（固定資本形
成+存貨增加,I）
淨輸出（貨品服務輸出貨品服務輸入,NX）
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台灣與美國對投資的定義不同
• 投資的定義為：固定資本形成＋存貨變動
• 台灣將固定資本形成定義為：民間部門、公
營事業部門與政府部門的加總。
• 美國的投資僅限於民間部門
• 美國政府採購（government purchase）則
包含政府消費支出及政府投資
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經濟成長率貢獻度 台灣1965~2008年五年平均
7
6
5
4
3
2
1
0
-1
65-69
70-74
75-79
80-84
85-89 90-94
95-99
00-04 05--08
-2
民間最終消費
政府最終消費
固定資本形成毛額
存貨增加
淨輸出
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REAL VERSUS NOMINAL GDP
• Nominal GDP（名目GDP） values the
production of goods and services at current
prices.
• Real GDP（實質GDP） values the
production of goods and services at constant
prices. It is the measure of the total quantity of
goods and services the economy is producing
is not affected by changes in the prices of
those goods and services.
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REAL VERSUS NOMINAL GDP
• An accurate view of the economy requires
adjusting nominal to real GDP by using the
GDP deflator.
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Table 2 Real and Nominal GDP
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Table 2 Real and Nominal GDP
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Table 2 Real and Nominal GDP
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The GDP Deflator (GDP價格平減指數)
• The GDP deflator is a measure of the price
level calculated as the ratio of nominal GDP to
real GDP times 100.
• It tells us what portion of the rise in nominal
GDP that is attributable to a rise in prices rather
than a rise in the quantities produced.
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The GDP Deflator
• The GDP deflator is calculated as follows:
Nominal GDP
GDP deflator =
 100
Real GDP
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The GDP Deflator
• Nominal GDP is converted to real GDP as
follows:
Real GDP20XX
Nominal GDP20XX

 100
GDP deflator20XX
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Table 2 Real and Nominal GDP
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Figure 2 Real GDP in the United States
Billions of
2000 Dollars
$10,000
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1970
1975
1980
1985
1990
1995
2000
2005
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台灣實質國內生產毛額自然對數值與時間趨勢 ：
1971－2008
15.2
14.8
14.4
14.0
13.6
13.2
12.8
12.4
1971
1975
1979
1983
1987
1991
1995
1999
2003
2007
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台灣實質國內生產毛額年成長率與景氣高峰與谷底：
1971－2008
0.06
0.04
0.02
0.00
-0.02
-0.04
-0.06
-0.08
-0.10
1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007
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IS GDP A GOOD MEASURE OF
ECONOMIC WELL-BEING?
• GDP is the best single measure of the wellbeing of a society.
• GDP per person(每人平均GDP) tells us the
income and expenditure of the average person
in the economy.
• Higher GDP per person indicates a higher
standard of living.
• GDP is not a perfect measure of the happiness
or quality of life, however.
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GDP AND ECONOMIC
WELL-BEING
• Some things that contribute to well-being are
not included in GDP.
– The value of leisure.
– The value of a clean environment.
– The value of almost all activity that takes place
outside of markets, such as the value of the time
parents spend with their children and the value of
volunteer work.
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Table 3 GDP and the Quality of Life
Taiwan
12,969
78.5
99
69%
*台灣資料除每人實質GDP外，其他資料均為2008年 資料來源為主計處：社會指標統計
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Summary
• Because every transaction has a buyer and a
seller, the total expenditure in the economy
must equal the total income in the economy.
• Gross domestic product (GDP) measures an
economy’s total expenditure on newly
produced goods and services and the total
income earned from the production of these
goods and services.
© 2007 Thomson South-Western
Summary
• GDP is the market value of all final goods and
services produced within a country in a given
period of time.
• GDP is divided among four components of
expenditure: consumption, investment,
government purchases, and net exports.
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Summary
• Nominal GDP uses current prices to value the
economy’s production. Real GDP uses
constant base-year prices to value the
economy’s production of goods and services.
• The GDP deflator—calculated from the ratio
of nominal to real GDP—measures the level of
prices in the economy.
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Summary
• GDP is a good measure of economic wellbeing because people prefer higher to lower
incomes.
• It is not a perfect measure of well-being
because some things, such as leisure time and
a clean environment, are not measured by GDP.
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