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    CH 6 National Income Student

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    Brownie Haven
    This document discusses key macroeconomic concepts related to national income accounting including: 1) The circular flow of income between households, firms, and different sectors in a closed and open economy. 2) Key components of GDP such as expenditures, output, imports, exports, taxes, and the government and foreign sectors. 3) The differences between nominal and real GDP, where nominal GDP reflects current prices and real GDP adjusts for inflation to reflect output in constant prices. The document provides examples to illustrate the differences between nominal and real GDP.

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    CH 6 National Income Student

    Uploaded by

    Brownie Haven
    9 views9 pages
    This document discusses key macroeconomic concepts related to national income accounting including: 1) The circular flow of income between households, firms, and different sectors in a closed and open economy. 2) Key components of GDP such as expenditures, output, imports, exports, taxes, and the government and foreign sectors. 3) The differences between nominal and real GDP, where nominal GDP reflects current prices and real GDP adjusts for inflation to reflect output in constant prices. The document provides examples to illustrate the differences between nominal and real GDP.

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    Ch 6 National Income Student

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    This document discusses key macroeconomic concepts related to national income accounting including: 1) The circular flow of income between households, firms, and different sectors in a closed and open economy. 2) Key components of GDP such as expenditures, output, imports, exports, taxes, and the government and foreign sectors. 3) The differences between nominal and real GDP, where nominal GDP reflects current prices and real GDP adjusts for inflation to reflect output in constant prices. The document provides examples to illustrate the differences between nominal and real GDP.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    9 views9 pages

    CH 6 National Income Student

    Uploaded by

    Brownie Haven
    This document discusses key macroeconomic concepts related to national income accounting including: 1) The circular flow of income between households, firms, and different sectors in a closed and open economy. 2) Key components of GDP such as expenditures, output, imports, exports, taxes, and the government and foreign sectors. 3) The differences between nominal and real GDP, where nominal GDP reflects current prices and real GDP adjusts for inflation to reflect output in constant prices. The document provides examples to illustrate the differences between nominal and real GDP.

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    SLIDE 1

    Part 4: The macroeconomy

    Ch 6: National Income
    CIRCULAR FLOW OF INCOME
    Foreign
    SLIDE 5
    sector
    CLOSED ECONOMY Expenditure

    Output

    Households Firms

    Land, labour,
    capital
    Factor incomes

    Banking sector
    OPEN ECONOMY Imports
    Foreign
    sector Exports
    Product
    Market Revenues
    Money
    Goods
    Goods and
    and Output
    Output
    services
    services
    Government
    sector
    Taxes Taxes

    Households Firms
    Public goods Public goods

    Factors of
    Land, labour,
    production
    capital
    Factor incomes: wages, Money
    rent, interest and profit Resource
    Market
    Investment
    Savings Banking sector
    GDP GNI

    National Income

    NNI
    FIND THE DIFFERENCE:
    1. Nominal and real value (use example)

    2. Market prices and basic prices

    3. Gross values and net values


    Nominal value vs Real value
    tells the size of the economy, health of the economy and how well the
    economy is
    GDP
    An indicator that shows how the country is doing with its goal of
    promoting long-run economic growth

    Nominal GDP Real GDP


    All the output produced in the All the output produced in the
    economy in a year, expressed in economy in a year, expressed in
    current money value. constant money value.
    Thus, it is unadjusted for inflation Thus, it is adjusted for inflation
    Indo GDP Data 2019

    Tempe Tahu
    Price Rp. 1000 Rp. 2000 Nominal GDP in : Rp. 5.000.000
    Quantity/kg 1000 2000 2019
    Total Rp. 1.000.000 Rp. 4.000.000

    Indo GDP Data 2020


    Tempe Tahu
    Nominal GDP in : Rp. 10.000.000
    Price Rp. 2000 Rp. 4000
    2020
    Quantity/kg 1000 2000
    Total Rp. 2.000.000 Rp. 8.000.000
    Indo GDP Data 2019

    Tempe Tahu
    Price Rp. 1000 Rp. 2000 Nominal GDP in : Rp. 5.000.000
    Quantity/kg 1000 2000 2019
    Total Rp. 1.000.000 Rp. 4.000.000

    To find Real GDP for 2020:


    Indo GDP Data 2020
    2020 output x 2019 prices
    Tempe Tahu
    Nominal GDP in : Rp. 10.000.000
    Price Rp. 2000 Rp. 4000
    2020
    Quantity/kg 1000 2000 Real GDP in
    2020:
    Total Rp. 2.000.000 Rp. 8.000.000
    Singapore GDP Data 2019

    Pork Jerky Bak kut


    Price $2 $4 Nominal GDP in
    Quantity/kg 2.000.000 2.000.000 2019:
    Total $ 4.000.000 $ 8.000.000

    To find Real GDP for 2020:


    Singapore GDP Data 2020
    2020 output x 2019 prices
    Pork Jerky Bak kut
    Nominal GDP in
    Price $4 $5
    2020:
    Quantity/kg 1.500.000 1.500.000 Real GDP in
    2020:
    Total $ 6.000.000 $ 7.000.000

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