Henig 1 AL TNEOME ACCOUNTING flonamic achuly helys engusn such Fok t# bung linodaced 9 vihy vaih bong fnedierd 9 2 balng genunaited 7 4 to Pavers ‘ond comes 7 P ROO noe ronet vastur of Pinal oulpok Pneduced usithin o neers fhene Caved Neer Produced ond lxnoughk to menkel hase Kite Fa measure of verte Coun caltdakng tubetl eolpak REAL HOP V9. NomiNAL croF ore Paayon NOMINAL tnoF Rea CoP Rees! (noe nef by He The omqneqaile mantel 3) Vali af cronemic Vasbie oF the « raneenie ovlpuk Pmedueed In a eubpute tasdared ie ron within He green Canied, ad fcad teoundom un of He courhay wee gee eae ie Unavin ae Meminasl Newel Gor AnPlashen anjusted oh Cr0P csitrouk Hre Meet of wor inPlaken. Cann ttan Pavers Bowe vean Paterson cenatenk Raters Mpon acres one Companisen of veniow quake compenisen of hue ou oF ins Guin Yaar con be mrene fnanuast Yoon rede can be dane conaly(rve witty meas nahonail fy modsehon me mas tu Hn GOP 8 gcewnnplice eye A nathons bedldut. vn Domeake = Neshona Tntome Premaitu Fareham coat > ant {HOP Pin capita: Tok Gor. HOP Fen capita Slendend oP (sing Meaouns of sbwbuled ou used Methods oF castestar Frail ecenomte archi Sold in monks UAMpoaked Income (900% on Mhow Wea 19 commenty std on « PE copile COP tell uo n ari Non -rankek Remultiea: Cannohbe anaslysed (need tndeahn of fainty = etereme queusty Gor versus une ‘edie’ oukpok predueed by @ nosHionis Fectous of eshue Ik heskes plosee "lly Focused, inclu: q og only eutpok Fuoduced asithin godless of whore chws one used. THE WORKING FORMULAE Cuore - Ocprecas on Nh n= Neb Foreho, oad Cu PHA) Mth Puree = Teelincet tax A80b wes, Gor Pea capita el OOP diuided by to tat Pomulaiion aineaige Prtonune O06 coun ha, a ra erbovk how tno ry ochuaty MBAUR BMBNT Pas@Lems GOP entail mearuninnt Problems y., Mice Goods and seutees Produced Hoa ane nok Manleh aithvihes nok aponted ty tog ig VALUE Apoepnedwetion of most geeds and semers: tnusluts Core oF stag To ascuuanaite. Mmeamune GBP use must dial Sea aiinguith behaean inkame disie Inkarmedtoite goede Services ponchaod Fen use an input tn Hw Readsehen 6 nail ardded ‘ ein re mankel veilve of o Rreduel that halies plaice ast ad tre (ueduchon Prsceas ‘ * TWO WAYS To CALCULATE GDP ornpule: Fre veslue of inal eubput In one of hse ws fount only mankeb hraansachons entailing Pinel sales and sum ovsnalt nk ont} the vaste added ort each stage of Production ond sum oun REAL VERSUS NOMINAL GOP omines| OF vase oF Finoit oulpub faodueed 1m @ given punted, mearunid in Pre fniees of Prost Penlod (ounnenk furees), Gt Real Cade: he valve of Pinal output fueduted ina guven Peatod, asdjuated fan changing trees hon, amrouge ounhay's COMPUTING REAL GOP Tnflokon : Aninencont In Hne axenage level oF furees of quds ond snvites, Inflaken tends to obscme ache! decbnes in weal oulpul Boise Yeon: TheYean ustd fom camporbve analysis; Hae bonis bon the Induntog fate changes Tne trenunel Foumela fou commpehng weal oP oP ts wctvelty lena tn ail ¢ is Reasl CADP in deon b= nomiresl GOP AY ean & gee ae ag Paice index ed thasl ane nok fe tox on fice lavel change as on index witha the Paice inden mupnenents @ base of tor -Fatee Jodex = 1004 Pireenbag ¢ change 8 mith exstput neat Yeon unless we hen ose use Hes ¥ Orparctoshon: Thy , ‘ [i Out oF oon PHon of capiter in mnaring 4 8F Bloat arth Wipment the Preduchon Paccess » Wh dateum dominhe bred, a BOR GADt EE cpascictiak The ernount of output hock OF capi bes pirnwk. 2 Rx penditunce en (Pande; ond shauchune ‘on of ° (capital) tm asstinn ton eet 1 eas pun henge in te Period, The dishincHon behuetn «oP behuseen gore \nuiobmenk and Conese in xntenent Totoil invinhmint ex perdi hune ina Tnvenheatnt inbrunt less deputation Shock of capital — Hay not “ed The majo nun of * Is rj ‘rlol ovtuk confowm be ing enh apenas: Wousthelds —> tansumphen Bornes Fim > nviotnnk Govanment trsvwinmant Spundin Dhrrahena! ferhurants — nb cuscabsneduein 4 ens plent plus Pre diPhnunce ond equ pment then. Ha ot manic CONSOMPNIONE " cess ond seuuees used by he on Loin sounding claims ousn file syesT MENT nia goods one the planks ne inewdes nek ewenkony cheng es Sl ai © Tnutshrent spending claiens osbovk one=wial VEQNMANT SPENDING ord by He Puble seeckoa one novels % counnreant spending on genie) ar aim cleims asbook of oun onnal eutey Feo ce rok Inckade bcente: LASSIE a Net BxeoRTS: Neb expowls re vastut of expOms Minus He value of imponls ree ond suwices sold to Inkanaibonsil i cocle ood sumuius punhensd Foden Inknnamenat aaa > Exeouts ens » Tempo (DP COMPONENTS! The value of 0° con be compu by, adding op Hat expenditures - m) pes t+ TAG alk waar; consurmphen capendihne Invupkroent eapend) kane We government expendihune - x > anpools M4 = )mpeunts {CALCULATION oF rATIONAL Income (EKFeNDINIEE METHOD) Expedituse f pwdibua method mesounes Finest axpuncbun, on trnaes Comentie Raadet]mh monet Pater” duning a Punted of actounh In othen csonds * expenditun Aaskonssl Income Is meanund ot the ng Yeas . Paint oe OMPONGNTS OF GDP, Privarte Finest consumpher expand hunt frovernmunt Pinast CoNsumpH on Neb Gepouts Domenhe capibal Tn not (regs Fixed capthel Povmnoshon expend hunt Poumask on on Nahonal debt Tavern bmunt Instead Tratrod of WAC), OH Looe ot The totes! value of VALue of ourput (on sumer Spincing > Trveahment Bpenaing Fda Mantel A Gsvanmnt 7 cay Nek cx punts NATIONAL Tacoma IACAINE Mahe Mneoouns lookin, who Ox pend hw wh hod buy 1A Hhisiee bong Paid te Medhec ie mmoach Intomen musk equal Fina! oulpol, om GOP. mle Ai took ( the demend (tre supply nde). Fete! vaste of VALUE of THrema a <— wages «— Rent Fouhan Peantet ™ Trhnok foots @Y INCOME ME THOO reMenal dneame Arie tingto the Pairmony Fackons of frodwchon in Hye Ronen and Rropt Fat tun pusduchue sinuiees teow tele (orpon®NTs OF DOMESTIC TNCOME meansnhion of emplyeres namand ov Compensation fad te emptyotes fom utes: Th includes Gragts and saslawes , eonplysana gs seuunity Schemes, dearness as lleuontt, bonus, city alleumatenl nant autlSwoonce, (aut brawling alleasenee eke hag Surplus des nent Pucg't andinhst- Rnefit inclides componnaite tam, Land undiaharbubed Punoiit By vse ne Plo of neame, ase ace FoR Wien oulput is Puneduced Orpurcasashion chonges ueduce CADP te the level of Nitt emusic Pnedeeh br fone ony income He owollarble ty cament Porchous of foroduchion NDP = qne~depucciahen Hosges, inknwk, ond faset Profits pad te Fovutonns am not fentef us ntome and netd te be subhaathd frcm He Intomt Flous Incomes canned by US abgea in othr nahens wpaumats on inflow wf incame +o Us houncholds and ant added Toleslincame eonned ey cumenk Paxtous of fireduebon NI ® NDP + met Fowugin fasthon income Income weeerved fey hounhelda be fore Couprunt ot fersona! tesnes #7 + 7 sine Bothnia ~ Thhait and mise payments ~ Sedal Seeuniby hanes, + hromshin foymunts + capital income. ~ Courpenate frefdsINDIRECT QUSINGSS TAXES! Owh ont sold in Hae moanke by than punchase faice is od place port in 90 Fypleaitly encumbered osttin Som sont of saslea lax peat . f + © These bareson puodueon and imponts de net ucpussent oyren fo Posthous of fuoducton CORPORATE PAoPits © (onponasle bosxes ond wileined earnin crepuurnt fenbeF componete fl noyts not meceiued by houncholds, so one subhnoxctkd fuern nestone! income © AN compomaske Cnofits One subhnothd, ten Hak Pont of Fac, ibs, Paid to hounchotd is lasken added back € in unden “Capi tel income PAYROLL TAXES AND TRANSPRRS © Socios! sceunthy toes one alse subhrowted > Monkas nwin see ths intame betaine Ibis wl thhdd a emeloyus and sent siccaley to the 0-3 Tutonuny. © Intome Im the Four of frana[n Pou ment WS added DisPosABLA TNvome! © Sowing: Tost Pont of disposable income Consumplion, disposable Income lem con nek Spink on aament © MM disposable Income is sam~ken . then Consumed on saved [Pt = fonsumelan 4 souings| Pia fensenest Income ~ Personal Tan | THR Plow of Income: Oh dotlon vaste oF oulpo estlt aslusay? Cqu01 the datlon Veale of © Tole! Incame Cor) ends ue deshuibuted « To hovstheld inthe foam of disposable Income. To busineases in the foam OF uchoined Trae cunere er aMB AND @XPBNOITURE! ‘ The Plow oP tneome thask Shantswith Gor obmostely wehuans be He montack, in tre Ponn of Nuss Consumplon Ce), Inueshmnl? (1), and Choumnment pone axes Ca)ANH par KEYNESIAN MODEL Tr kusniman Theowy of incomeand enn: J uJ oFincome ond unplioumant Is ef feehu Aggrgaske demand Toso enpendibune hes 8 components Agguigal. consumplen expendinhune enconsumen goods Fagg Invutment expenditine on capitesl qreds suuanment expenditane on goods and suru), phe thon miiay the quililiumn Level of naskenasl Taetgnte defend and aaareqeks Sorel hes te AO 2 Ke eabich te Pre CaUloatum condi hen Nous inte use heme Lenow Hast ox I“g~uk supply ts Ine tele! furoduction of aivon coauae goin Nakenal howe held asablly 22> me te eg ulll bodued COMBI oatum candiKan inveshnenk ts equal hy sania, words Cxpest souings Is always equasl to expat bub te-enly nek be equast ko ke txanke Inueshment Actwol ( ncolised Planned wincwan consumeben Funchen clv|sa4by whneaend bb one msionts and o200 2 B0y, = 480-480 x 80 y, F240 Cc Ye atrag —— '-6(1-e) 712© 460 =190 1201100 4200 eee ts (50.3) sal = 420 ——_ = 20 | Sita inp = 480 Sava Yt 2) 2V0-196 > bo PRRADex of THReT (savinens xh a by€ Smeneanes * SPT a> can + AS > AD (This wilt couse uninhinded muentouy aceumolashon), tw much Savings Oslll dewease the naskenal Income of an sehen 8 ne 4 OF CHANGE IN EXPENDITURE LEVEL ON 2NCOMe: 1341 ay ay § mutha Towehmink may tk pu Govunenent Nulhplen x nee s “peeee'1y nace ee A4bYo + To FA sb er,By howe mech a fy:ensumphen Funchon is b. a ws constant, ib be toms o taAby, NT MULTIPLIER hy 12 AO Cunve equal te Consumption Punch on 7 Yo 2 €q (Ye) + To 2 ¢ 4) a, mw Te > O+bYe +10 1) 2 ashy, 44 Ov+b(ay)4 41 b) ay = a2 wm ercaponal of 1 ie gucaiha than 4 * on mvelmenk muthola: Ths fosher ond queate, ole conslent8 SECTOR MoDEL Yo = alt bYo 4 y, Ftey, +1, 46 bay +a FOR Taxes ou ay -bay | On bay (-b) 2a on ay an. gi © t4040- Ry to TEX changes t (00. Than what happen ty 441 Ubaiom in tome. Yee+1 4G-br eaatonan > ~ 08x 240 #604 10 ~0-8et0 te oa 2 50 aroy elke |) a Oaon Fon Taxes Y= €(¥-7) #35 469 a4 (¥-1) 419 4bo Ky > bIdY~dr) 447, 4dtny “bay 2 bat 4 ag dt Wwe dt and do ao 442260 ro lta muthpliu is 4 aT Thhaees and Govern enk ex penditunc Inmeare (1-8) ay ~bdT 4d (ane dear) bdtde \-b ib Tax mothplen 2) d¥ “ ade which ist (mis tathe beslanced budge | Hutkeua). ow leek Now it v= a ¢y) FVD o =r LY (oohae 7 com be o Parcentage of ¥), te (Y-tY) * daeeatbdli-t) NY AT4G 06 Piste) Jy 2aar ee on [ i-b(1-t) Jdy adtad@ Be J Now Fou imumbmut Mutkelin dG 26 1 edladY 21 t-bli-ty ay {Ll (-bycr-t) ond Fon Crounnmet Mulkelia d1lso Seal = d& ay dy 1 . Pri ey TBI) Hue Y. 1 Ci-by (t-bSU-e) DYNAMIC MuL TPLIER : oe P(y,) In Thikel Pnted bz0 Or 20%, A EL, Pevod 1, ee Ac, + b-A%e (b=mec) 2ay, AY faved 2 Aloe BAY, bbOYe 2 baa bYay, => AYo Ab Pened 9 OG = bo, = b8AY, DOYg OY = BY. 4AY 4099 409 AM bY, + bay, 4 BA, 4 b O76 AY =O% (babe abes ..... ) By cnr (14b4 ee Bees )(we new & Is | 123 then 1, bait be tome negligible). a a8 <—- Combinesken of Y ond x > Pocket monlet equilibuiun = aty2sh) 4 Rak of inkaet (v2 42) de snake of Negabwely sloped tance a Ihe Imkentol Intnesaes, Hoe In cen Yoh Bast vcsCONSTAUCTION OF 18 CunVE MATHEMATICALLY pemive 42¢G) +20) ON~Cly)=1 br) om Sly) = 1 Cr) at 2 cd¥ 4 ade (ice)sy sintavcipie7s Cokes ” Catrina! equahon Fan Slope is ay i ax s oa end rye] Equahon of (S cunve and slope: | Nte(v)4 ty 180408 450-0.4¥ N- O94 Sipe-e4y O29 4 0.42200 ef O.ay 4 On 2200 te dwidingby 0-2 14 Ie 2 toe dr ee = 1-08 WwW Tes SW) =a0y) 32 V-euL V>C41 > cxtam supply, The wegion ‘yng to the wight of Is anve means ences: Sqnm agen (ying to tne lePh of the ggnegeate a PI preety. TS cunve means excess,SHIFTS IN TS cuRVE tuhen 6 highin “140 be Combing asttny 846% any gu cu TS CUAve to ahiFE 40 the Ulght. The game is a@ppltable Pow T4 9% Ch which shiPls Ts cunve bo leFk- LM curve Ms: MO whine mony Supply cs givin (3) om Constant. © Anansack on Demond Fon money 2) md =F Cy) Poc—easkonany Demand Pou mony Sepeeutative Demand fou mane by a tr) La'co LM Cunve means eguilibutum in money mankek iO Mesms Tnonsacken Demand myW)*Male) 2A Md) 4 gee can MidvsMa'dy 20 (nce meng sveply te sonmtat) On mars My aeExcess Oemand Four mon, v BY & Fev both money and Paden MF age Ca tB0r0-8y migarey BAe bn, 2 2 200-Yoor My 2 203- agy Yo? (ery 2 \88 40:87 1200-400 r2)0-5Y + 4oor = 866 —3 U1) o-o4 Mo 2450 4 = 00S -26y o-6y +298 ~28% 2 480 ou oS 0) + 25% 2 218 0-5) 4 400% 2 250 ast > us ) © “ase = as on © oa 05) 4 400 10-314: B50 on o-ght) 4127-22840 on 0-3 ) 2298 omy =>hKe BSH > Excess ay °F thoeds. 3m —> Gace repety oF menus. SOW > Cxcessdenend of treads SOM —> @eeess Jemandel mong:PALL IN THA RBAL INCOMB oF FIAGO 2NcOMe ne rears Punshoriny Powsn of monuy inteme [Rear cocemne = | Real ¢ nice level] the mon INCOMme Of ne fae manny income) £ te \ Ja copa i (ele Neves , tre eas} tocome call Baill dunt eteils wrontns, gastenied People inwon - kerning tannins Vela INEQUALITY TH THE O1S7@QUTION Of TNCOME GuETTTEEEE) mw fnoht Lacemes of busininamen ond enhnupmeneuns Intncace Juang nPlasven, while Hhe wcot Mneome of the Connmon salanied Pecpl. declinwo - 30 inequaslty In the diahnilbuken of income become ding aPlakon 3 UPSETS THA PLANNING PROCESS ey Flaenony Pnasune moy alae upatt the enki planning Pnecess inan ctonemny when Pred of goods, meshaials ond faxbbus Souter Intnedoe CenkKnvo the mene monty han te bc spenh Fon the commpleon of ony ieatmint furojeck¥ tesken vp dunt ony fleaning Puntod. TP waeve mone Finendal Resoun estate waved by the trovnnmenk (tnnough sauings om twrateon), plans fenget au te be cuntoiled. INCREASE TN SPECULUEATIVE INVESTMENT © g és He Price Level Riseo ota Pack Rake, Speewlalue inueshment (seg faachoning hare, land gems,ele. just For spcculestue fonpere} cane in the cconomy Four a Lonming quick Pucpita. hue typusel tahrunks donot hetp 4, the cra ae Sarees capi in the if Menara a hike fare ARMPUL TMPACT ON CAPITAL ACCUMULATION l alee Rise bees mie thurenie, Peapte finchen goods +> me! il eiAiareate astute of money cult Pall In Fubune ) + ke nae craig Consumphon to Consumphen in Pubne: 30, Hy Stomey (1d AE the same hime, fam abilly te save \ tos, neem, Far because, ltas because, eit eae mee Send mone Pon Pune the <