8 THE DATA OF MACROECONOMICS. Copyright © 2004 South-Western 23 Measuring a Nations Income.
Lecture 3 measuring a nations income
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Transcript of Lecture 3 measuring a nations income
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Macroeconomics
Lecture 3
Measuring a Nations’s Income GDP
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Questions?
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1. Name the six types of capital 2. What type of capital is water? 3. What were the two inventions the Wright Brothers developed? 4. What is capital? 5. Are entrepreneurs the same thing as inventors? 6. Name two elements of cultural capital. 7. What incentivized the development of kerosene? 8. What is horizontal fracking? 9. What type of capital are you developing when you go to college? 9. What type of capital are you developing when you write a book? 10. If you want to change someone's economic system, what should you change?
11. What does GDP stand for? 12. What is the definition of GDP? 13. What is GDP per capita?
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StudentIntroductions
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1978China Changed Worldview
Deng Xiaoping
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Worldview
Political
Legal
Economic
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Free to Trade
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GDP Per
Capita
Saudi Arabia $25,000
India $1,500Pakistan $1,261
Bangladesh $800
16.7 times more 19.8 times more 31.2 times more
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Science
HardSoft
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Most people
Most of the time
Economics is a Soft Science
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GDPGross Domestic Product
The market value of all final goods and services produced in a country in
a given time
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GDPHow much stuff a
country makes
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GDP Per CapitaGDP Per Person
Average GDP
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Market ValueWhat something
would sell for
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Market ValueOne Apple
plusOne Orange
= Three Dollars
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AllEverything except...
Stuff you don’t sell
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FinalIntermediate
Final
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Final
Intermediate
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Goods and Services
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Goods
Services
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ProducedNew Stuff
Does not include the sale of used goods
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Within a Country
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In a given period of timeYear Y/Y
Quarter Q/QAnnualized: Q x 4
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PercentageChange
new number - old numberold number
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This Year - Last YearLast Year
This Year = 75Last Year = 60Percentage Change?
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75 - 6060
1560
.25 or 25%
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How do you calculate
GDP?
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GDP =C = ConsumptionI = InvestmentG = GovernmentX = ExportsM = Imports
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GDP =C + I + G + (X - M)
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ConsumptionSpending by
households on goods and services, except new housing
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InvestmentSpending on capital
equipment, inventories, and structures, including new
housing
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GovernmentSpending on goods and services from
local, state, and federal governments.
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Net ExportsExports minus
imports
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Net ExportsForeigners buying
exports minus domestic residents
buying foreign goods
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What is GDP?C = 105I = 40G = 25X = 30M = 20
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What is GDP?C = 105I = 40G = 25E = 30I = 20
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GDP= C + I + G + (X - M)= 105 + 40 + 25 +(30-20)= 105 + 40 + 25 +10= 180
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GDP per Person
GDP per CapitaAverage GDP per
person
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GDP $75 trillion
Population 7.5 billion
GDP Per Capita $10,000
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GDP $18 trillion
Population 318 million
GDP Per Capita $56,600
United States
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GDP $11 trillion
Population 1.4 billion
GDP Per Capita $7,857
China
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https://fred.stlouisfed.org
Public Data Explorer
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Intellectual
Financial Physical
Human
Culture
Entrepreneur
trust knowledge skills personality health relationships
natural resources time buildings equipmentthings than make things
money and risksavers and borrowers time is money
(1+r)n
insurance limited liability corporations
ideas technologymethods
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Cultural Capital
Determines the relationship of
entrepreneurs to capital
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Human Capital
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I look for three things in hiring people.
The first is personal integrity, the second is
intelligence, and the third is a high energy level.
But of you don’t have the first, the other two will kill
you.
- Warren Buffett, CEO, Berkshire Hathaway
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Integrity Competence
Trust
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Trust Knowledge and Skills Health and Nutrition Social Relationships
Human Capital
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