Lecture 2

of 26

Please download to get full document.

View again

All materials on our website are shared by users. If you have any questions about copyright issues, please report us to resolve them. We are always happy to assist you.
PDF
26 pages
0 downs
4 views
Share
Description
macroeconomics
Tags
Transcript
  Income DeterminationIncome Determination ãGNP can be viewed as a flow of either GNP can be viewed as a flow of either  product  product   or or income.income.  The basic GNP identityThe basic GNP identity  ::ãC+I+G+(X-M!C+ +T+# C+I+G+(X-M!C+ +T+#  f f  !GNP!GNP $here% C: total val&e of cons&'tion e)endit&re% I: $here% C: total val&e of cons&'tion e)endit&re% I: total val&e of invest'ent e)endit&re% G: *ovt total val&e of invest'ent e)endit&re% G: *ovt  &rchases of *oods and services%(X-M:net  &rchases of *oods and services%(X-M:net e)orts% :*ross rivate savin*s (b&siness savin*s% e)orts% :*ross rivate savin*s (b&siness savin*s%  ersonal savin*s and dereciation% #  ersonal savin*s and dereciation% #  f f  :transfers to :transfers to forei*nersforei*ners  Income DeterminationIncome Determination ã$e ass&'e a closed econo'y Ie$e ass&'e a closed econo'y IeC+I+G!C+ +T!,!GNPC+I+G!C+ +T!,!GNP National inco'e , is 'eas&red at c&rrent  National inco'e , is 'eas&red at c&rrent  rice levels and is referred to as 'oney or  rice levels and is referred to as 'oney or no'inal GNPno'inal GNP No'inal , can be broen down into a rice  No'inal , can be broen down into a rice co'onent P and a real co'onent yco'onent P and a real co'onent y,!Py ,!Py  Income DeterminationIncome Determination ãIn national inco'e acco&nts real o&t&t is In national inco'e acco&nts real o&t&t is 'eas&red on a disa**re*ate basis by dividin* 'eas&red on a disa**re*ate basis by dividin* the vario&s co'onents (C%I%G of o&t&t in the vario&s co'onents (C%I%G of o&t&t in no'inal ter's by relevant rice indices This no'inal ter's by relevant rice indices This (c%i%*is then added & to obtain real o&t&t y (c%i%*is then added & to obtain real o&t&t y $e then have a real o&t&t identity:$e then have a real o&t&t identity:ãc+i+*!y!c+s+tc+i+*!y!c+s+tãChan*es in e'loy'ent are always related to yChan*es in e'loy'ent are always related to yãChan*es in P refer to inflationChan*es in P refer to inflation  Income DeterminationIncome Determination ãIt is liely that ta) ay'ents%cons&'er sendin* and It is liely that ta) ay'ents%cons&'er sendin* and savin* are all liely to deend on level of inco'e In savin* are all liely to deend on level of inco'e In fact each will be an increasin* f&nction of inco'efact each will be an increasin* f&nction of inco'eãt!t(y%tt!t(y%t .. /01c!c(y-t(y%c/01c!c(y-t(y%c .. /01s!s(y-t(y%s/01s!s(y-t(y%s .. /0/0ãIf cons&'er sendin* and savin* e)ha&st disosable If cons&'er sendin* and savin* e)ha&st disosable inco'e then cinco'e then c .. +s+s .. !2!2ãIn other words a chan*e in disosable inco'e '&st In other words a chan*e in disosable inco'e '&st  be allocated between c and s be allocated between c and sãy!c(y-t(y+i+*y!c(y-t(y+i+*
Related Search
We Need Your Support
Thank you for visiting our website and your interest in our free products and services. We are nonprofit website to share and download documents. To the running of this website, we need your help to support us.

Thanks to everyone for your continued support.

No, Thanks