Please enable JavaScript.

Coggle requires JavaScript to display documents.

CH5: National Income Accounting and Standard of Living*, what is…

- - - - assuming there is no saving, when expenditure equals output, there is no change in the circular flow of income. (equilibrium)
        
        national output = national income = national expenditure
- - - - output approach: total receipt clooected by firms
      - income approach: total income received by factors of production
      - expenditure approach: comsumption expenditure
    - - 3. Net National Product (NNP) = GNI - depreciation
        
        refers to the total money value of all final goods and services produced by factors owned by residents, irrespective of whether the factors are located within the geographical boundary of the country or abroad after accounting for depreciation, within a specific period, normally a year.
      - 2. Gross National Income (GNI) = GDP + NFYA
        
        refers to GDP plus factor incomes earned by residents overseas minus factor income earned by non-residents in the domestic economy
        例如：美国在加拿大的公司算作是USA的GNI，但是美国境内的加拿大公司不算
      - 1. Gross Domestic Product (GDP)
        
        refers to the total money value of all final goods and services produced within the geographical boundary of the country, regardless of the ownership of the factor of production, within a specific period, normally a year.
        其中的final goods：鸡蛋不算final，用鸡蛋做成的蛋糕算finla
      - National vs domestic
        
        domestic refers to income / expenditure / output gained within the country.
        
        national refers to income / expenditure / output of residents fo a country, regardless where the economic activity occured
        
        in countries where foreigners own a large part of the production, the value of GDP may be high but the value of GNI will be very low because a large part of the income will be remitted to residents of foreign countries abroad.
        
        on the other hand, some of the incomes earned by domestic residents will come from abroad, in the form of wages, interest... This is Net Factor Income Abroad (NFYA), many developing countries have a negative NFYA.
      - Nominal income vs real income
        
        nominal national income is the national income measured of current prices
        
        real national income is national income after accounting for inflation
        例如，如果某一年的national income比去年高出10%，但同时prices are also 10 percent higher, then the average person will be no better off at all
        
        real GDP (of year) = (Nominal GDP / GDP deflator) × 100
        
        growing, stagnating or declining
    - - standard of living
        
        refers to the level of economic welfare and social well-being of an individual or household. it includes the quantitive (material) and qualitative (non-material) aspects of living
        
        material:
        
        the number of goods and services that individuals within the country available for consumption
        
        most widely used statistics is real per capita GNI
        
        non-materal:
        
        indicators like the amount fo leisure people consume, life expectancy, standard of education, absence fo pollution and other social factors
- - - - measure of economic welfare (MEW) = GNI - capital depreciation - regrettable (e.g.expenditure on defence and pollution) + allowance for leisure + non-marketed activities (e.g. housework and underground activities) + public amenities (e.g. parks and roads) + private durable goods (e.g. furniture and jewellery)
        
        adjustment of GNI and GDP, with adjustments for leisure, environmental degradation, income distribution and other economically unsustainable costs such as depletion of natural resources
        
        difficult to compute, difficult to qualify
      - index of sustainable economic welfare
        
        starts with consumption, with adjustments to account for factors that GDP ignores. (e.g. inequalities, composition of output such as government expenditure on defence, environmental costs and resources depletion and damage )
        
        considerable debate as to the precise damage caused by a given amount of global warming.
        
        but be roughly right is better than precisely wrong
      - human development index (HDI) = real GDP per capita + knowledge (adult literacy) + health (life expectancy and infant mortality rates )
        
        rank countries by level of human development
        
        implied whether is a developed or developing country
      - physical quality of life (PQOL) = (literacy rate + indexed infant mortality rate + indexed life expectancy) / 3
        
        PQLI is the measure of quality of life or well-being of a country
        
        base on the avarage of 3 statistics:basic literacy rate, infant mortality, life expextancy at age one
      - social progress index
        
        index to measure national progree
        
        foundations of well-beings
        
        access to basic knowledge
        
        access to information and communication
        
        health and wellness
        
        ecosystem and sustainability
        
        oppurtunity
        
        perosnal rights
        
        personal freefom and choice
        
        tolerance and inclusion
        
        access to advanced education
        
        basic human needs
        
        nutrition and basic medical care
        
        water and sanitation
        
        shelter
        
        personal safety
- - - - d. externalities incuured over time are ignored
        
        GNI figures do not take into accout the negative externalities of production that reduce welfare. (e.g. pollution, congestion, the ozone layer depletion)
        
        difficult to quantify the value and extent of the negative externalities, but it is true that the net benefits will be less
        
        e. some productive activities are excluded but may have changed over time
        
        GNI does not record the output of some goods and services.
        (1) non-marketed items: many products are not transacted in the market (e.g. housewives)
        有的时候是以前non-marketed的东西变成marketed了，所以GNI往上加了，这中monetisation不算是welfare improvement
        (2) underground economy
        
        changes in the size of the underground economy will not be reflected in the national income (比如有的是illegal的交易)
        
        moonlighting: people do extra work outside their normal job and they do not declare the income for tax
        
        c. change in income distribution over time are not considered
        
        the rich minority in a country could be receiving a larger proportion of the GNI while the poor majority could be receiving a smaller share of GNI.
        
        to measure income inequality, Gini Coefficient is used. 绝对平均是0，完全不平均是1。越高约不平均。
        
        f. leisure and human costs fo production overtime is not taken into account
        
        e.g. everyone works more, the output will increase but welfare will decrease
        
        b. change in the size of population
        
        does not take into account the change in the size of the population
        
        so real per capita GNI is a better measure of SOL = (real GNI / total population)
        % △ in real GNI per capita = % △ in real GNI - % △ in population size
        
        g. change in the composition of output over time
        
        does not reflect the change in quality and type of goods in a dynamic world
        
        quantitative rather than qualitative
        比如时代在进步，科技在发展，电子设备在很多年前是没有的，既然如此，GNI的变化就显得不那么重要了
        
        production does not equal consumption
        比如国家生产的很多东西是investment，被consume的其实很少，所以不会提升现在的SOL，但是有可能会提升以后的SOL
        还有的例子比如说arming for war
        
        a. Nominal GNI does not take into account changes in prices over time
        
        a rise in the money value of GNI does not necessarily mean a rise in the volume of goods, and services produced (could be due to rising prices)
        
        to accurately compare 2 years, the figures must be adjusted so that we are using a common price level. (deflate the data)
        Real GNI = current year GNI × (base year index / current year index) 切记是base在上！！
        
        h. changes in the statistical coverage and reliability of data over time
        
        daya collective will become more comprehensive and relibale over time
    - - d. countries differ in external costs
        
        higher output in some countries may be accompanied by higher levels of crime, pollution, congestion
        有的国家output很高但是welfare很低
        
        e. the black economy differs between countries
        
        GNI figures do not record the output of some goods and services
        (1) non-marketed items
        in developing countries, there is a major problem of omission of non-marketed transactions. developed countries on the other hand have a higher degree of specialisation of production, this means that such items as omitted by the developing countries, will be included in the developed countries' calculations of GNI
        在发展中国家，存在遗漏非市场交易的主要问题。另一方面，发达国家的生产专业化程度较高，这意味着发展中国家省略的这些项目将被纳入发达国家的GNI计算中
        (2) underground economy
        developing countries tend to have a larger underground economy
        
        illegal
        
        moonlighting
        
        c. countries differ in their distribution of income
        
        does not show the actual income earned by an individual
        
        f. countries differ in amount of lersure time enjoyed
        
        a country could have higher GNI at the expense of less leisure time enjoyed
        
        b. countries differ in the size of population
        
        GNI per capita better
        
        g. countries differ in their composition of national output
        
        similar GNI, but produce substantially different range of goods and services.
        比如有的国家给军事投入很多钱，有的国家给good and services投了很多钱。countries that devote a larger proportion of resources to investment may have a lower level of current consumption
        
        a. comparison between countries are made in terms of a common currency
        
        most widely used: US dollar
        
        official change rate does not reflect the relative purchasing power of the currencies
        举个例子，两个国家的GNI换算出来都是1000美元，但是国家A的东西价格远远比国家B要高，国家A的SOL就会远低于国家B。
        
        purchasing power parity (PPP): measures the number of foreign currencies needed to but the same basket of goods and services in the 2 countries
        举个例子，某个东西在新加坡的价格是100美元，在美国的价格是150美元，那么PPP rate = 1:1.5 (或者直接0.67美元，意思就是0.67美元就能买到美国1美元能买到的东西)
        
        hence, the PPP-adjusted GNI figure is preferred
        但还是有limitations： qualitative differences in different countries are not taken into account + different needs due to environment
        
        h. accuracy and reliability of data colection differ between countries
        
        no internationally agreed methos of measuring national income.
        
        not all countries use the same basis for their calculations
        
        accuracy also differ. statistical services are better developed in high-income contries