Chapter 3:The Goods Market o 3-1: The Composition of GDP e3-2: The demand for goods 3-3:The Determination of Equilibrium Output 3-4: Investment Equals Saving: An Alternative Way of Thinking About Goods-Market Equilibrium 93-5: Is the government Omnipotent?A Warning 2003-6-29
2003-6-29 1 Chapter 3:The Goods Market 3-1:The Composition of GDP 3-2:The Demand for Goods 3-3:The Determination of Equilibrium Output 3-4:Investment Equals Saving:An Alternative Way of Thinking About Goods-Market Equilibrium 3-5:Is the Government Omnipotent?A warning
Figure 1: Production, Income, and the Demand for goods Production Income Demand 3-6 29
2003-6-29 2 Figure 1:Production,Income, and the Demand for Goods Production Income Demand
3-1:The Composition of GDP O The first component of gDP is consumption c) INvestment( is sometimes called fixed investment to distinguish it form inventory/ investment Nonresidential investment Residential investment EGovernment spending, G) Not include government transfers ONet exports X-Q)is the difference between exports(X) and imports(Q) O Inventory investment(s) is the difference between goods produced and goods sold in a given year 2003-6-29 3
2003-6-29 3 3-1:The Composition of GDP ●The first component of GDP is consumption,(C) ●Investment (I) is sometimes called fixed investment to distinguish it form inventory investment. •Nonresidential investment • Residential investment ●Government spending,(G) • Not include government transfers ●Net exports(X-Q) is the difference between exports(X) and imports(Q). ●Inventory investment(IS ) is the difference between goods produced and goods sold in a given year
The Composition of U.S GDP1998 Billions of Percent of GDP Dollars GDPY 8509 100 Consumption(c) 5806 68 2 Investment() 1308 15 Nonresidential 939 Residential 369 3 Government Spending(G) 1488 18 4 Net Exports 154 Exports(X) 958 Imports(Q) 1112 -13 5 Inventory Investment(s)61 2003-6-29
2003-6-29 4 The Composition of U.S.GDP,1998 Billions of Dollars Percent of GDP GDP(Y) 1 Consumption(C) 2 Investment(I) Nonresidential Residential 3 Government Spending(G) 4 Net Exports Exports(X) Imports(Q) 5 Inventory Investment(IS ) 8509 5806 1308 939 369 1488 -154 958 -1112 61 100 68 15 11 4 18 -2 11 -13 1
3-2: The Demand for Goods Consumption ( C) ● Investment() P Government(G) 2003-6-29 5
2003-6-29 5 3-2:The Demand for Goods Consumption (C) Investment (I) Government (G)