宏观经济学ch19.pptVIP

GDP: Measuring Total Production and Income GDP: Measuring Total Production and Income Gross Domestic Product Measures Total Production Gross Domestic Product Measures Total Production How to measure GDP ? Three Approaches Expenditure Approach – add up all expenditures on domestically produced goods and services Income approach – add up all incomes received by owners of factors of production ( wage for labor, rent for land, interest for capital and profit for entrepreneurship) Production approach– sum of value added of all firms All methods theoretically yield the same value of GDP A Two Sector Model of Income and Expenditure A two sector model: Assume: close economy with only household and firm sectors, no financial sector, no government, all income earned is spent, no retained profit. Then: Total income (Y) = Total expenditure (AE)= Total production A Five Sector Model of Income and Expenditure When we add financial sector, government, and the rest of world, total income is not necessarily = total expenditure unless leakages= injections Leakage– the part of household income that is not spent on domestically produced goods and services, includes saving (S), Tax (T) and import (M) Injection– expenditures made on domestically produced goods and services from non-household sources, includes investment (I), government expenditure (G) and export (X) Y =AE (aggregate expenditure): A five sector model of income and expenditure (when leakages=injections) Gross Domestic Product Measures Total Production Gross Domestic Product Measures Total Production GDP Measured by Expenditure Approach Changes in inventories Inventories - goods that have been produced but not yet sold, they are part of total production, so they are included in GDP ( we treat inventories as if bought by firms themselves) . Changes in inventories= the value of inventories at the beginning of the year - the value of inventories at the end of the year If changes in inventories o, invent