Chapter 13 Global Editlon National Income Accounting and the Balance of Payments International Economics THEORY POLICY Ninth Edition Paul R.Krugman Maurice Obstfeld Marc J.Melitz PEARSON PEARSON Copyright 2012 Pearson Education.All rights reserved
Copyright © 2012 Pearson Education. All rights reserved. Chapter 13 National Income Accounting and the Balance of Payments
Preview National income accounts measures of national income - measures of value of production measures of value of expenditure o National saving,investment,and the current account Balance of payments accounts 13-2 Copyright2012 Pearson Education.All rights reserved
Copyright © 2012 Pearson Education. All rights reserved. 13-2 Preview • National income accounts – measures of national income – measures of value of production – measures of value of expenditure • National saving, investment, and the current account • Balance of payments accounts
National Income Accounts Records the value of national income that results from production and expenditure. Producers earn income from buyers who spend money on goods and services. The amount of expenditure by buyers the amount of income for sellers the value of production. National income is often defined to be the income earned by a nation's factors of production. 13-3 Copyright 2012 Pearson Education.All rights reserved
Copyright © 2012 Pearson Education. All rights reserved. 13-3 National Income Accounts • Records the value of national income that results from production and expenditure. – Producers earn income from buyers who spend money on goods and services. – The amount of expenditure by buyers = the amount of income for sellers = the value of production. – National income is often defined to be the income earned by a nation’s factors of production
National Income Accounts:GNP Gross national product (GNP)is the value of all final goods and services produced by a nation's factors of production in a given time period. What are factors of production?Factors that are used to produce goods and services:workers (labor services), physical capital (like buildings and equipment),natural resources and others. The value of final goods and services produced by US- owned factors of production are counted as US GNP. 13-4 Copyright2012 Pearson Education.All rights reserved
Copyright © 2012 Pearson Education. All rights reserved. 13-4 National Income Accounts: GNP • Gross national product (GNP) is the value of all final goods and services produced by a nation’s factors of production in a given time period. – What are factors of production? Factors that are used to produce goods and services: workers (labor services), physical capital (like buildings and equipment), natural resources and others. – The value of final goods and services produced by US- owned factors of production are counted as US GNP
National Income Accounts:GNP(cont.) GNP is calculated by adding the value of expenditure on final goods and services produced: 1.Consumption:expenditure by domestic consumers 2.Investment:expenditure by firms on buildings equipment 3.Government purchases:expenditure by governments on goods and services 4.Current account balance (exports minus imports):net expenditure by foreigners on domestic goods and services Copyright2012 Pearson Education.All rights reserved. 13-5
Copyright © 2012 Pearson Education. All rights reserved. 13-5 National Income Accounts: GNP (cont.) • GNP is calculated by adding the value of expenditure on final goods and services produced: 1. Consumption: expenditure by domestic consumers 2. Investment: expenditure by firms on buildings & equipment 3. Government purchases: expenditure by governments on goods and services 4. Current account balance (exports minus imports): net expenditure by foreigners on domestic goods and services