ECON 2000 Lecture Notes - Lecture 56: Gross National Income, Fixed Investment, National Accounts
14 May 2018
School
Department
Course
Professor
ECON 2000
Lecture 56
The components of expenditure
- GDP in four broad categories of spending
o Consumption (C), Investment (I), Government purchases (G),
Net exports (NX)
o Y = C + I + G + NX
o National Accounts Identity
- Consumption = goods/services bought by household: durable (long
lasting goods) and nondurable goods (short-lasting goods) and
service
- Investment = goods bought for future use: business fixed investment
(purchase of new plant and equipment by firm), residential
construction (purchase of new housing) and inventory investment
(increases in firm’s inventories of goods)
- Government purchases = goods/services bought by federal,
provincial and municipal governments (e.g. military equipment,
highways, services by government workers, but doesn’t include
transfer payments since they reallocate existing income)
- Net exports = trade with other countries
Several measures of income
- To obtain gross total of Canadian income that flows from GDP, the
GNP, subtract net income of foreigners who own factors of production
employed in Canada
- Gross national income = GDP – net income of foreigners
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Document Summary
Gdp in four broad categories of spending: consumption (c), investment (i), government purchases (g), Net exports (nx: y = c + i + g + nx, national accounts identity. Consumption = goods/services bought by household: durable (long lasting goods) and nondurable goods (short-lasting goods) and service. Investment = goods bought for future use: business fixed investment (purchase of new plant and equipment by firm), residential construction (purchase of new housing) and inventory investment (increases in firm"s inventories of goods) Government purchases = goods/services bought by federal, provincial and municipal governments (e. g. military equipment, highways, services by government workers, but doesn"t include transfer payments since they reallocate existing income) Net exports = trade with other countries. To obtain gross total of canadian income that flows from gdp, the. Gnp, subtract net income of foreigners who own factors of production employed in canada. Gross national income = gdp net income of foreigners. Net national income = gross national income depreciation.
