经济增长与国民收入测量

Study Notes

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: 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)

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.

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).

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