Chapter 7 Intro to Macroeconomics & Nat'l Income Accounting
Aims
National Income Statistics
Circular Flow Model
Economic growth
Indicator
Full employment/low rate of unemployment
Indicator
Unemployment rate
GDP or National Income
Price stability
Indicator
General Price Level
Favourable balance of trade
Indicator
Balance of trade
Output approach
National output
Income approach
National income = W+R+I+P
Expenditure approach
National expenditure = C+I+G+(X-M)
GDP vs GNP
Factor income from abroad
Factor income paid abroad
Net factor income from abroad
Difficulties in measuring National Income
Non-reported transactions
Non-market transactions
Availability of data
Measuring SOL of a country
limitations
Material
Non-material
Over time and space
Inflation/deflation rates [S&T]
Population size [S&T]
Distribution of income [S&T]
Types of goods being produced [T]
Qualitative changes in consumer goods [S&T]
Statistical coverage and reliability of data [S&T]
Increased monetisation of an economy [T]
Conversion to a common currency [S]
Over time and space
Amount of leisure time [S&T]
Presence of negative externatilities [S&T]
Composite indicators of a country's SOL
Human Development Index (HDI)
Measure of Welfare (MEW)
Life expectancy at birth
Education attainment
Real GDPpc
GNP
Value of leisure time enjoyed by citizens
Value of unpaid work
Economic output in the underground economy
Excludes disamenity
Genuine Progress Indicator (GPI)
Accounts for income inequality when measuring GDP
Includes non-market benefits not included in GDP
Identifies and deducts bads e.g. environmental degradation, human health effects, loss of leisure time, costs of crime
Limitiations
Measuring the indicators
Subjectivity of the composite indicators
Composite indicators only focus on certain aspects of SOL