national income account.ppt

Section III overview From international Micro economy to open-Macro economy About macro economy target : price, growth, employment, and balance of payments. The core property of open-Macro economic is how an economy can get the equilibrium of internal- and external What should we learn from section III?_ an integrated model of exchange rate and output determination This section comprises of 6 chapters, namely 12-17 Chapter 12 National Income Accounting and the Balance of Payments Introduction The National Income Accounts National Income Accounting for an Open Economy The Balance of Payment Accounts Summary Introduction Microeconomics It studies the effective use of scarce resources from the perspective of individual firms and consumers. Macroeconomics It studies how economies’ overall levels of employment, production, and growth are determined. It emphasizes four aspects of economic life: Unemployment Saving Trade imbalances Money and the price level Introduction The national income accounts and the balance of payments accounts are essential tools for studying the macroeconomics of open, interdependent economies. National income accounting Records all the expenditures that contribute to a country’s income and output Balance of payments accounting Helps us keep track of both changes in a country’s indebtedness to foreigners and the fortunes of its export- and import-competing industries The National Income Accounts Gross national product (GNP) The value of all final goods and services produced by a country’s factors of production and sold on the market in a given time period It is the basic measure of a country’s output. Real and nominal GNP with GNP price inflator The National Income Accounts GNP is calculated by adding up the market value of all expenditures on final output: Consumption The amount consumed by private domestic residents Investment The amount put aside by private firms to build new plant and equipment for future production Governmen