-Gross national product(GNP): is the value of all final goods and services prudced by a nation's
fac tors of production in a given time perio d
- it is the basic measure of a country's o utput, is measured by adding up the market value of all
expenditures on the final output (internal measures, the movement btw national economics)
- factors of making up GNP: the employment of labour, capital and other factors of production.
- Income approach= expenditure approach
Y(income) = C + I + G + CA
Expenditure by domestic net exp o rts=trade balance (current account)
-denote: C=individu al
- 4 diff types of expenditures that make up a country's GNP
- 1.Consumption 2. Investment3. Government purchases4. Current account balance
- we c annot hope to understand the cause o f a particular recession or boom w.o knowing how the
main categories of spending have changed . If so, we can't recommend a sound policy response.
- and the national income ac counts provide information essential for studying why some countries
are rich , that is, have a high level of GNP relative to population size while some are po or.
- Government spending -- is determined by politicians sometimes economy is recession.
Government still spends money for elections 9 of 10 will promise some spends that satisfied for
voters even though economy is booming. It mainly b ased on politica l reason.
- NX -- is very small amount compare to other component = export - import
For CA, expo rt is h uge, 40% of what produced in CA, M is small around 10% of GDP for CA,
increase in exchange ra te, decrease in export
-GNP - income received by Canadians (firms , individuals) for corporate, owned by individual
shareholders still belong to individuals
- more precise mea sure of national income is GNP adjusted for 1. Depresicaiton , 2. Unilateral
- Depreciation: put aside, can have same k in the future to produce out/income, replenish worn out
- NNP(net national product) + UT(unilateral transfers) -IBT( in d irect business taxes) = NI
-ex, Toyota in Cambridge, it;s located in Cambridge bu t still count as Japan.
- GNP= A+B - residency of owners of income, and it is spending capacity
- GDP= B+C - locatio n of economic activities pro duction capacity