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Principles of
Macroeconomics, 9e
; ; By
Karl E. Case,
Ray C. Fair &
Sharon M. Oster
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CHAPTER 6 Measuring National Output and National Income
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PART II CONCEPTS AND PROBLEMS
IN MACROECONOMICS
Measuring National
Output and National
6
Income
© 2009 Pearson Education, Inc. Publishing as Prentice Hall Principles of Macroeconomics 9e by Case, Fair and Oster
PART II CONCEPTS AND PROBLEMS
IN MACROECONOMICS
Measuring National
Output and National
6
Income
CHAPTER 6 Measuring National Output and National Income
CHAPTER OUTLINE
Gross Domestic Product
Final Goods and Services
Exclusion of Used Goods and Paper
Transactions
Exclusion of Output Produced Abroad by
Domestically Owned Factors of
Production
Calculating GDP
The Expenditure Approach
The Income Approach
Nominal versus Real GDP
Calculating Real GDP
Calculating the GDP Deflator
The Problems of Fixed Weights
Limitations of the GDP Concept
GDP and Social Welfare
The Underground Economy
Gross National Income per Capita
Looking Ahead
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Measuring National Output and National Income
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Gross Domestic Product
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Gross Domestic Product
Final Goods and Services
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Gross Domestic Product
Final Goods and Services
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Gross Domestic Product
Exclusion of Used Goods and Paper Transactions
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Gross Domestic Product
Exclusion of Output Produced Abroad by Domestically Owned Factors
of Production
CHAPTER 6 Measuring National Output and National Income
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Remittance: Impact in GDP or GNP?
CHAPTER 6 Measuring National Output and National Income
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Calculating GDP
CHAPTER 6 Measuring National Output and National Income
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Calculating GDP
The Expenditure Approach
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Calculating GDP
The Expenditure Approach
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Calculating GDP
The Expenditure Approach
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Calculating GDP
The Expenditure Approach
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Calculating GDP
The Expenditure Approach
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Calculating GDP
The Expenditure Approach
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Calculating GDP
The Expenditure Approach
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GDP Calculation
1. As a digital marketing consultant provider, you hire a content writer for 30,000 BDT per
month.
CHAPTER 6 Measuring National Output and National Income
2. Ms. Y selling her house to an Arabian for 10,00,000 BDT in this year.
4. Ms. M buys a new home in Chittagong for 1.5 crore BDT amount.
5. U.S. Bangla buys a Boeing 737-800 from United States for 80 million dollars.
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Calculating GDP
The Income Approach
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Calculating GDP
The Income Approach
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Calculating GDP
The Income Approach
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Calculating GDP
The Income Approach
Dollars
(Billions)
GDP 13,841.3
Plus: Receipts of factor income from the rest of the world + 817.5
Less: Payments of factor income to the rest of the world - 721.8
Equals: GNP 13,937.1
Less: Depreciation - 1,686.6
Equals: Net national product (NNP) 12,250.5
Less: Statistical discrepancy - 29.4
Equals: National income 12,221.1
Source: See Table 6.2.
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Calculating GDP
The Income Approach
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Calculating GDP
The Income Approach
CHAPTER 6 Measuring National Output and National Income
TABLE 6.5 National Income, Personal Income, Disposable Personal Income, and
Personal Saving, 2007
Dollars
(Billions)
National income 12,221.1
Less: Amount of national income not going to households - 561.6
Equals: Personal income 11,659.5
Less: Personal income taxes - 1,482.5
Equals: Disposable personal income 10,177.0
Less: Personal consumption expenditures - 9,734.2
Personal interest payments -262.8
Transfer payments made by households -137.1
Equals: Personal saving 42.9
Personal saving as a percentage of disposable personal income: 0.4%
Source: See Table 6.2.
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Calculating GDP
The Income Approach
CHAPTER 6 Measuring National Output and National Income
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Calculating GDP
The Income Approach
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Nominal versus Real GDP
in current dollars.
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Nominal versus Real GDP
CHAPTER 6 Measuring National Output and National Income
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Nominal versus Real GDP
Calculating Real GDP
CHAPTER 6 Measuring National Output and National Income
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Nominal versus Real GDP
Calculating Real GDP
fixed-weight procedure.
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Gorgonzola is a small island nation with a simple economy that produces only six goods:
sugar cane, yo-yos, rum, peanuts, harmonicas, and peanut butter. Assume that one
quarter of all the sugar cane is used to produce rum and one half of all the peanuts
are used to produce peanut butter.
CHAPTER 6 Measuring National Output and National Income
a. Use the production and price information in the table to calculate nominal GDP for 2015.
b. Use the production and price information in the table to calculate real GDP for 2013,
2014, and 2015 using 2013 as the base year. What is the growth rate of real GDP
from 2013 to 2014 and from 2014 to 2015?
c. Use the production and price information in the table to calculate real GDP for 2013,
2014, and 2015 using 2014 as the base year. What is the growth rate of real GDP
from 2013 to 2014 and from 2014 to 2015?
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Asian Development Board Forecast
CHAPTER 6 Measuring National Output and National Income
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IMF Data Mapper
Growth is forecasted to be
2.019 % in Dec 2020 as
reported by International
Monetary Fund. It records
an increase from the last
reported number of 7.879 %
in Dec 2019. Looking ahead,
Bangladesh’s Real GDP
Growth is projected to stand
at 9.531 % in Dec 2021.
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Nominal versus Real GDP
Calculating the GDP Deflator
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Q/A
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Q/ A
The following table contains nominal and real GDP data, in billions of dollars,
from the U.S. Bureau of Economic Analysis for 2013 and 2014. The data is
CHAPTER 6 Measuring National Output and National Income
listed per quarter, and the real GDP data was calculated using 2009 as the
base year. Fill in the columns for the GDP deflator and for the percent
increase in price level.
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Nominal versus Real GDP
The Problems of Fixed Weights
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Is GDP a Good Measure of Economic Well-Being?
CHAPTER 6 Measuring National Output and National Income
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Limitations of the GDP Concept
GDP and Social Welfare
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What GDP doesn’t count:
- The quality of the environment
- Leisure time
- Non-market activity
CHAPTER 6 Measuring National Output and National Income
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When Senator Robert Kennedy was running for president in 1968, he gave a
moving critique of such economic measures:
[Gross domestic product] does not allow for the health of our children, the quality of their
education, or the joy of their play. It does not include the beauty of our poetry or the
CHAPTER 6 Measuring National Output and National Income
strength of our marriages, the intelligence of our public debate or the integrity of our
public officials. It measures neither our courage, nor our wisdom, nor our devotion to
our country. It measures everything, in short, except that which makes life worthwhile,
and it can tell us everything about America except why we are proud that we are
Americans.
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Limitations of the GDP Concept
Gross National Income per Capita
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Limitations of the GDP Concept
The Underground Economy
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Limitations of the GDP Concept
The Underground Economy
CHAPTER 6 Measuring National Output and National Income
FIGURE 6.1 Per Capita Gross National Income for Selected Countries, 2006
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REVIEW TERMS AND CONCEPTS
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