Matakuliah
Tahun
: J0594-Teori Ekonomi
: 2009
MEASURING DOMESTIC OUTPUT AND
NATIONAL INCOME
Pertemuan 4
Gross Domestic Product
• Gross Domestic Product (GDP) is measure of the total
market value of all final goods and services produced by the
economy in given year
• A monetary Measure
Exp :
Year
1
2
Annual Output
Market value
3 sofas and 3 computers 3 at $500 + 2 at $2000= $5000
2 sofas and 3 computers 2 at $500 + 3 at $2000= $7000
• Avoiding Multiple Counting
To avoid counting those component each time, GDP includes
only the market value of final goods and ignore intermediate
goods altogether
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Gross Domestic Product
Expenditures, or Output
Approach
Consumption
expenditures by
households
plus
Iinvestment expenditures
by business
plus
Government purchases of
goods and services
plus
Expenditures by foreigner
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Income or Allocations
Approach`
= GDP=
Wages
plus
Rents
plus
Interest
plus
Profit
plus
Statistical adjustment
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Expenditure Approach
Gross Investment
- Depreciation
= Net Investment
Gross
Investment
Net
Investment
Depreciation
Increased
Stock of
Capital
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January 1
Consumption
& Government
Spending
Year’s GDP
Stock of
Capital
December 31
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The Expenditures Approach
GDP = C + Ig + G + Xn
C = Expenditures
Ig = Gross Private Domestic Invesment
G = Government Purchases
Xn = Net Exports
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The Expenditures Approach
Personal Consumption Expenditures C
• Durable Consumer Goods
• Nondurable Consumer Goods
• Consumer Expenditures for Services
Gross Private Domestic Investment Ig
• Machinery, Equipment, and Tools
• All Construction
• Changes in Inventories
• Noninvestment Transactions
Government Purchases G
• Expenditures for Goods and Services
• Expenditures for Social Capital
Net Exports Xn
Xn = Exports (X) – Imports (M)
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The Income Approach
• Compensation of Employees
• Rents
• Interest
• Proprietor’s Income
• Corporate Profits
Corporate Income Taxes
Dividends
Undistributed Corporate Profits
Taxes on Production and Imports
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The Income Approach
• From National Income to GDP
– Net Foreign Factor Income
– Statistical Discrepancy
– Consumption of Fixed Capital
• Other National Accounts
–
–
–
–
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Net Domestic Product (NDP)
National Income (NI)
Personal Income (PI)
Disposable Income (DI)
DI = C + S
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The Income Approach
Gross Domestic Product (GDP)……….$ 12,487
Consumption of Fixed Capital……... -1,574
Net Domestic Profit (NDP)……………..$ 10,913
Statistical Discrepancy…………………
-43
Net Foreign Factor Income …………
34
National Income (NI)…………………….$ 10,904
Taxes on Production and Imports…
-917
Social Security Contributions……..
-871
Corporate Income Taxes …………..
-378
Undistributed Corporate Profits ….
-460
Transfer Payments ………………….. +1,970
Personal Income (PI)……………………$ 10,248
Personal Taxes ………………………. -1,210
Disposable Income (DI) ……………….. $ 9,038
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GDP Approaches Compared
Accounting Statement for the U.S. Economy, 2005 (in Billions)
Receipts
Expenditures Approach
Allocations
Income Approach
Personal Consumption (C) $ 8746
Gross Private Domestic
2105
Investment (Ig)
2363
Government Purchases (G)
-727
Net Exports (Xn)
Compensation
Rents
Interest
Proprietor’s Income
Corporate Profits
Taxes on Production and
Imports
National Income
Gross Domestic Product
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$ 12,487
$ 7125
73
498
939
1352
917
$10,904
Net Foreign Factor Income
-34
Statistical Discrepancy
43
Consumption of Fixed
Capital
1574
Gross Domestic Product $ 12,487
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