西方经济学原理Chap_5Week3

MeasuringGDPandEconomicGrowthCHAPTER5AfterstudyingthischapteryouwillbeabletoDefineGDPandusethecircularflowmodeltoexplainwhyGDPequalsaggregateexpenditureandaggregateincomeExplainthetwomethodsusedbytheBureauofEconomicAnalysistomeasureU.S.GDPExplainhowtheBureauofEconomicAnalysismeasuresrealGDPandtheGDPdeflatortoseparateeconomicgrowthfrominflationExplaintheusesandlimitationsofrealGDPAnEconomicBarometerWhatexactlyisGDP?HowdoweuseGDPtotelluswhetheroureconomyisinarecessionorhowrapidlyoureconomyisexpanding?HowdowetaketheeffectsofinflationoutofGDPtorevealtherateofgrowthofoureconomicwell-being?Andhowtowecompareeconomicwell-beingacrosscountries?GrossDomesticProductGDPDefinedGDPorgrossdomesticproductisthemarketvalueofallfinalgoodsandservicesproducedinacountryinagiventimeperiod.Thisdefinitionhasfourparts:MarketvalueFinalgoodsandservicesProducedwithinacountryInagiventimeperiodGrossDomesticProductMarketValueGDPisamarketvalue—goodsandservicesarevaluedattheirmarketprices.Toaddapplesandoranges,computersandpopcorn,weaddthemarketvaluessowehaveatotalvalueofoutputindollars.GrossDomesticProductFinalGoodsandServicesGDPisthevalueofthefinalgoodsandservicesproduced.Afinalgood(orservice)isanitemboughtbyitsfinaluserduringaspecifiedtimeperiod.Afinalgoodcontrastswithanintermediategood,whichisanitemthatisproducedbyonefirm,boughtbyanotherfirm,andusedasacomponentofafinalgoodorservice.Excludingintermediategoodsandservicesavoidsdoublecounting.GrossDomesticProductProducedWithinaCountryGDPmeasuresproductionwithinacountry—domesticproduction.InaGivenTimePeriodGDPmeasuresproductionduringaspecifictimeperiod,normallyayearoraquarterofayear.GrossDomesticProductGDPandtheCircularFlowofExpenditureandIncomeGDPmeasuresthevalueofproduction,whichalsoequalstotalexpenditureonfinalgoodsandtotalincome.Theequalityofincomeandoutputshowsthelinkbetweenproductivityandlivingstandards.ThecircularflowdiagraminFig.5.1illustratestheequalityofincome,expenditure,andthevalueofproduction.GrossDomesticProductThecircularflowdiagramshowsthetransactionsamonghouseholds,firms,governments,andtherestoftheworld.GrossDomesticProductThesetransactionstakeplaceinfactormarkets,goodsmarkets,andfinancialmarkets.GrossDomesticProductFirmshirefactorsofproductionfromhouseholds.Theblueflow,Y,showstotalincomepaidbyfirmstohouseholds.GrossDomesticProductHouseholdsbuyconsumergoodsandservices.Theredflow,C,showsconsumptionexpenditure.GrossDomesticProductHouseholdssave,S,andpaynettaxes,T.Firmsborrowsomeofwhathouseholdssavetofinancetheirinvestment.GrossDomesticProductFirmsbuycapitalgoodsfromotherfirms.TheredflowIrepresentsthisinvestmentbyfirms.GrossDomesticProductGovernmentsbuygoodsandservices,G,andborroworrepaydebtifspendingexceedsorislessthannettaxes.GrossDomesticProductTherestoftheworldbuysgoodsandservicesfromus,X,andsellsusgoodsandservices,M.NetexportsareX–M.GrossDomesticProductAndtherestoftheworldborrowsfromusorlendstousdependingonwhethernetexportsarepositiveornegative.GrossDomesticProductTheblueandredflowsarethecircularflowofexpenditureandincome.Thegreenflowsarefinancialflows.GrossDomesticProductThesumoftheredflowsequalstheblueflow.GrossDomesticProductThatis:Y=C+I+G+X–MGrossDomesticProductThecircularflowdemonstrateshowGDPcanbemeasuredintwoways.AggregateexpenditureTotalexpenditureonfinalgoodsandservices,equalsthevalueofoutputoffinalgoodsandservices,whichisGDP.Totalexpenditure=C+I+G+(X–M).GrossDomesticProductAggregateincomeAggregateincomeequalsthetotalamountpaidfortheuseoffactorsofproduction:wages,interest,rent,andprofit.Firmspayoutalltheirreceiptsfromthesaleoffinalgoods,soincomeequalsexpenditure,Y=C+I+G+(X–M).GrossDomesticProductFinancialFlowsFlowsthroughfinancialmarketsfinancedeficitsandinvestment.HouseholdsavingSisincomeminusnettaxesandconsumptionexpenditure.Thatis,S=Y–(T+C).Savingflowsintothefinancialmarkets.GrossDomesticProductIfGexceedsT,thegovernmenthasabudgetdeficit(G–T)andthegovernmentborrowsfromthefinancialmarkets.IfTexceedsG,thegovernmenthasabudgetsurplus(T–G)andthissurplusflowstothefinancialmarkets.IfU.S.importsexceedU.S.exports,theUnitedStatesborrowsanamountequalto(M–X)fromtherestoftheworld.RestofworldsavingfinancessomeinvestmentintheUnitedStates.IfU.S.exportsexceedU.S.imports,theUnitedStateslendsanamountequalto(X–M)totherestoftheworld.U.S.savingfinancessomeinvestmentinothercountries.GrossDomesticProductHowInvestmentIsFinancedInvestmentisfinancedfromthreesources:1.Privatesaving,S2.Governmentbudgetsurplus,(T–G)3.Borrowingfromtherestoftheworld(M–X).GrossDomesticProductWecanseethesethreesourcesofinvestmentfinancebyusingtheequalityofaggregateexpenditureandaggregateincome.StartwithY=C+S+T=C+I+G+(X–M).ThenrearrangetoobtainI=S+(T–G)+(M–X)PrivatesavingSplusgovernmentsaving(T–G)iscallednationalsaving.GrossDomesticProductGrossandNetDomesticProduct“Gross”meansbeforedeductingthedepreciationofcapital.Theoppositeofgrossisnet.Tounderstandthisdistinction,weneedtodistinguishbetweenflowsandstocks.FlowsandStocksinMacroeconomicsAflowisaquantityperunitoftime.Astockisthequantitythatexistsatapointintime.Gr