Sustainable Development Goals and GDP

Sustainable Development Goals (SDGs)

• 17 global goals created by the UN to improve the world by 2030
• The overall goal is to end poverty, protect the environment, and promote peace and prosperity
• Companies report on SDGs to show commitment, stay accountable, and track progress
• Specific SDGs include:
  • No Poverty
  • Zero Hunger
  • Good Health and Well-being
  • Quality Education
  • Gender Equality
  • Clean Water and Sanitation
  • Affordable and Clean Energy
  • Decent Work and Economic Growth
  • Industry, Innovation, and Infrastructure
  • Reduced Inequality
  • Sustainable Cities and Communities
  • Responsible Consumption and Production
  • Climate Action
  • Life Below Water
  • Life on Land
  • Peace, Justice, and Strong Institutions
  • Partnerships for the Goals

Gross Domestic Product (GDP)

• Is the total market value of all final goods and services produced within a country in one year
• Only include current production, not past years
• Excludes transfer payments like pensions or cash gifts

National Income Accounting

• Used to measure a country's economic performance
• A country's financial report card tracks how much money the economy makes and where it comes from
• Helps governments make decisions on taxes, spending, and policies
• Shows how income is generated and distributed

Ways to Measure an Economy’s Income

• Gross Domestic Product (GDP)
• Gross National Product (GNP)
• Net National Income (NNI)

Final vs. Intermediate Goods

• Final goods are ready to use by consumers, like cellphones or furniture
• Intermediate goods are used to make final goods, like plastic or metal parts
• Only final goods are counted in GDP to avoid double counting

Three Main Ways to Measure GDP

• Expenditure Approach: Measures total spending on final goods and services
  • Formula: GDP = C + G + I + (X – M)
    • C: Personal Consumption
    • G: Government Spending
    • I: Investments by businesses
    • X: Exports
    • M: Imports
• Income Approach: Adds all income earned in the country
  • Formula: GDP = W + R + IR + P + D + T – S
    • W: Wages
    • R: Rent
    • IR: Interest
    • P: Profit
    • D: Depreciation
    • T: Taxes
    • S: Subsidies
• Value-Added (Industrial Origin) Approach: Adds the value added at each production stage
  • Formula: GVA = TO – IC
    • TO: Total Output
    • IC: Intermediate Consumption
    • GVA = GDP

GDP vs. GNP vs. NNP

• Gross Domestic Product: Goods and services made inside the country
• Gross National Product: Goods and services made by Filipinos worldwide
• GNP = GDP + Net Factor Income from Abroad (NFIA)
• Net National Product: Total value of goods and services produced by a country's residents after accounting for depreciation
• NNP = GNP – Depreciation

Other Income Measurements

• National Income (NI): NI = NNP - Indirect Business Taxes
• Personal Income (PI): PI = W + R + IR + P + TP
  • TP: Transfer Payments (e.g., government support)
  • PI: Personal Income
  • W: Wages
  • P: Profits
  • R: Rent
  • I: Interest
  • TP: Transfer Payments
• Personal Disposable Income (PDI): PDI = PI - Income Taxes

Real vs. Nominal GDP

• Nominal GDP uses current prices, including inflation
• Real GDP adjusts for inflation

GDP Growth Rate

• Measures how much the economy grew or shrank

Price Level

• The average price of goods and services in the economy
• Measures inflation (price increase) or deflation (price decrease)

Business Cycle Phases

• Contraction (Recession): Economy slows down, high unemployment, low inflation
• Trough: Lowest point, unemployment at its highest, signals start of recovery
• Expansion: Economy is growing, low unemployment, rising inflation
• Peak: Highest point of growth, very low unemployment, high inflation

Supply and Demand

• Market: A system where buyers and sellers interact to exchange goods and services, based on supply and demand
• Demand: The amount of goods or services consumers are willing and able to buy at a certain price during a specific time
• Demand Formula: Qd = a – bP
  • Qd = Quantity Demanded
  • a = intercept (maximum Qd when price is 0)
  • b = slope (change in Qd over change in price)
  • P = Price
• Law of Demand: As price increases, demand decreases (and vice versa)
  • Inverse relationship between price and quantity demanded
• Determinants of Demand: Things that shift the demand curve, including income (+/-), tastes and preferences, and number of buyers
• Supply: The amount of goods or services that producers are willing and able to sell at different prices
• Supply Formula: Qs = c + dP
  • Qs = Quantity Supplied
  • c = intercept (minimum Qs when price is 0)
  • d = slope (change in Qs over change in price)
  • P = Price
• Law of Supply: As price increases, supply also increases
  • Direct relationship between price and quantity supplied
• Determinants of Supply: Things that shift the supply curve, including resource prices, technology, number of sellers, taxes and subsidies, the price of other goods, and expectations about future prices
• Market Equilibrium: When quantity demanded (Qd) is equal to quantity supplied (Qs), there is no surplus or shortage
• Equilibrium Formulas: Qd = Qs
  • To solve for Price (P): 100 – 2P = 60 + 2P → solve for P
  • To solve for Equilibrium Quantity (Qe): Plug the value of P into either Qd or Qs
• Price Ceiling: The highest price sellers are legally allowed to charge (usually to protect buyers)
• Price Floor: The lowest price sellers are legally allowed to charge (usually to protect sellers)