经济增长与国民收入测量

Topic U - Economic Growth and Wellbeing

• Explain how national income is measured. Students don't need to know how it's calculated
• Economic growth is measured by change in GDP over time
• National income, output, and expenditure are all methods to measure total economic activity in an economy
• Gross Domestic Product (GDP) is the total level of economic activity during a given period.
• The ONS uses three methods to find GDP: income-side, output-side, and expenditure-side. These are calculated as averages, not precise values
• National Income = total income earned by factors of production (wages, interest, rents, profits)
• National Output = Total market value of final goods and services
• National expenditure = Total expenditure on final goods and services (C+I+G+(X-M))
• C = Private Consumption Expenditure
• I = Firm's Investment Expenditure
• G = Government Consumption Expenditure
• X = Total Exports of goods and services
• M = Total Imports of goods and services

Nominal GDP vs Real GDP

• Nominal GDP: measures the value of all goods and services produced, valued at current market prices. Includes the effects of inflation.
• Real GDP: Measures economic output, adjusting for price changes (inflation and deflation). Values goods and services at constant prices from a specific base year. A better measure of national output.
• Nominal GDP = ∑ QC x PC
• Real GDP = ∑ Qc x Pb (Price base)

Example

• Assume a country produces one product (food)
• Output (2018) = 120
• Market Price (2018) =$1
• Nominal GDP (2018) = $120
• Output (2019) = 100
• Market Price (2019) = $2
• Nominal GDP (2019) = $200
• To know changes in real GDP, remove the price effect by measuring 2019 GDP at 2018 prices
• Real GDP (2019) = $100
• An increase in nominal GDP is not necessarily an increase in real output.

Test Yourself

• Example calculating percentage increase in nominal GDP
• Example on percentage increase in real GDP
• Explain reasons for a change in real output, not just price

Wealth and Income Distribution

• Income is money received over a time period (e.g., weekly, yearly) from wages, interest, dividends, and rent.
• Wealth is the monetary value of assets (e.g., property, shares, cash).
• Income is more evenly distributed than wealth
• Factors affecting income distribution: people's skills, demand, state benefits, progressive tax system, public services
• Wealth is more unevenly distributed than income: wealth often earns income
• Lorenz curve: graph showing income distribution (horizontal axis is the cumulative percentage of the population, vertical is the cumulative percentage of total income)
• Diagonal line represents perfect equality. The further a Lorenz curve is away from the diagonal, the greater the inequality.
• Gini coefficient measures inequality, calculated from the Lorenz curve. Values range from 0 (complete equality) to 1 (complete inequality).

Measuring the Standard of Living

• GDP per capita: a country's total GDP divided by the population
• GNI (Gross National Income): includes income received from both domestic and foreign sources
• Limitations of GDP as an indicator of living standards: doesn't account for income distribution, the "hidden" economy, non-market transactions, quality and durability, and other aspects of well-being like the Gini coefficient or the Human Development Index