Download - National Income and Product Accounts (NIPA)
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National Income and Product Accounts (NIPA)
Accounting system for the U.S. to measure aggregate economic activity
www.bea.gov
United Nations System of National Accounts
International standard system of national accountsunstats.un.org
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Gross Domestic Product (GDP)
Market value of final goods and services newly produced within a nation during a fixed period of time
– Market value– Newly produced final goods and services– Fixed period of time
GDP per capita is an economy’s GDP divided by its population
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U.S. GDPChained 2005 Dollars
www.economagic.com
per-capita real GDP
real GDP
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The Income-Expenditure Identity
Y = C+I+G+NX
– Y = GDP (Income)
– C = consumption
– I = investment
– G = government purchases
– NX = net exports
What is produced is spent somewhere
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The Income-Expenditure Identity
Expenditures in 1996 Billions of dollars Percent of GDP
Personal Consumption Expenditures (C) 5151 68.0Gross private domestic investment (I) 1117 14.7Government purchases of goods and services (G) 1406 18.6Net exports (NX) -99 -1.3 Exports 855 11.3 Imports 954 12.6
Total (equals GDP) (Y) 7576 100.0
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GDP is same as National Income
GDP = National Income + Indirect taxes +Depreciation - Net Factor Payments (NFP)
The income approach says that what is produced is income to someone
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National Income
Income in 1996 Billions of dollars Percent of GDP
Compensation of employees 4449 58.7
Proprietors' income 518 6.8
Rental income of persons 127 1.7
Corporate profits 654 8.6
Net interest 403 5.3
Total (equals National Income) 6151 81.2
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National SavingS = Y+NFP-(C+G)
Savings rate is savings as a percent of GDP
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Current Account
CA = NX+NFP = S-I
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Budget Deficit
Sg = (T-TR-INT)-G
• T = Tax Receipts
• TR = Transfers to private sector
• INT = interest on national debt
• G = Government purchases
• Sg=Budget (surplus if positive, deficit if negative)
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U.S. Budget Deficit
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Some Fundamental Prices
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The General Price Level
Y = nominal GDP
Y = P * y
• P = GDP deflator or simply market price• y = real GDP or quantity of goods produced
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The General Price Level
• Price growth = inflation:
• Real GDP growth:
100111
t
tt P
P
100111
t
tt y
yg
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Consumer Price Inflation
research.stlouisfed.org/fred2
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Nominal Interest Rate
• The (short-term) interest rate is the risk-free rate of return that can be earned in the market.
• R = Dollar interest rate
• Invest $1 today at the rate R
• Receive $(1+R) in one period (day, week, month, year, etc.).
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• The (ex post) real interest rate, r, is the rate of return in units of goods.
r = R -
• (Ex post) real interest rate is nominal interest rate minus (realized) inflation.
Ex Post Real Interest Rate
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• The inflation rate is typically not known
• Expected (ex ante) real interest rate = nominal interest rate - expected inflation
re = R - e
• The expected real interest rate is the nominal interest rate less expected inflation – the Fisher equation
Ex Ante Real Interest Rate:The Fisher Equation
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Inflation and Nominal Interest Rate in the United States
R
Inflation
Nominal Interest Rate
Interest Rate
Inflation
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Glossary of TermsGDP Gross Domestic Product (also Y)NFP Net Factor PaymentsGNP Gross National Product = GDP + NFPC National ConsumptionI National InvestmentG Government ExpenditureX ExportsM ImportsNX Net exports = X - MS National Saving = Spvt + Sgovt
T Total taxesTR Transfer paymentsINT Interest payments InflationPt General price level at time tR Nominal interest rater Real interest rate (ex post)