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National Aggregates
 

National Aggregates

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    National Aggregates National Aggregates Presentation Transcript

    • Measurement of Macroeconomic Aggregates
    • Introduction
      • Concepts like GDP, GNP and national income are significant from the view of the macro economy of the country. They provide valuable information about the information of the economy’s health.
      • GNP is the sum of all final goods and services produced by the factors of production – land, labor, capital, and entrepreneurship – of a country during a certain period of time
      06/07/09
      • If all such goods are valued as a price paid to all the factors of production, it is known as GNP at Factor cost. Factors of production earn income in the form of wages, salaries, rent, interest and profits etc. GNP is a flow concept.
      • GDP, on the other hand, is the total market value of all final goods and services produced during a given period within the boundaries of the country, whether by domestic or foreign-supplied resources.
      06/07/09
    • Session Outline
      • Concept of value addition
      • National product aggregates
      • Relationship between Gross & Net; MP & FC; and National & Domestic Concepts
      • Real and nominal GNP
      • Price indices and types
      06/07/09
    • Concept of Value Addition 06/07/09 Stage: 1 Stage: 2 Stage: 3 Stage: 4 Stage: 5 Value added by Farmer = Rs.0.6 Value added by Miller = Rs.1.30 Value added by Baker = Rs.1.80 Value added by Retailer = Rs.0.20 Final value of Baked Bread = Rs.3.90 Value of storing and handling by retailer Value of storing and handling by retailer Value of baking operation Value of baking operation Value of baking operation Value of milling wheat into flour Value of milling wheat into flour Value of milling wheat into flour Value of milling wheat into flour Value of wheat from farmer Value of wheat from farmer Value of wheat from farmer Value of wheat from farmer Value of wheat from farmer Value added in different stages of bread production
    • National Aggregates 06/07/09 1. Gross Domestic Product (GDP) a) at market price (MP) b) at factor cost (FC) 2. Gross National Product (GNP) a) at market price (MP) b) at factor cost (FC) 3. Net Domestic Product (NDP) a) at market price (MP) b) at factor cost (FC) 4. Net National Product (NNP) a) at market price (MP) b) at factor cost (FC)
    • Relationship between Gross & Net; MP & FC; and National & Domestic Concepts 06/07/09 Gross = Net + Depreciation Market Prices = Factor Cost + [Indirect Taxes – Subsidies] National = Domestic + Net Factor Income from Abroad
    • Real and Nominal GNP 06/07/09 Real GNP (Current Year) = Nominal GNP (current year) x GNP deflator (base year) GNP deflator ( current year)
    • Price Indices
      • Consumer Price Index (CPI)
      • Wholesale Price Index (WPI)
      • GDP deflator
      06/07/09
    • Measurement of National Income
      • Output (Value Added) Method
      • Expenditure Method
      • Income Method
    • Output (Value Added) Approach The Output (Value Added) Method The agricultural and extractive industries Plus Manufacturing industries Plus Services and construction Equals Gross Domestic Product at Factor Cost Plus Net factor income from abroad ( = income received from abroad – income paid abroad) Equals Gross National Product at Factor Cost Less Capital consumption or depreciation Equals Net National Product at Factor Cost or National Income
    • Expenditure Method 1. Consumption (C) 2. Gross private domestic investment (I g ) [i.e. Net private domestic investment + depreciation] 3. Government purchases (G) 4. Net exports (NX) Gross domestic product (GDP) at Market Prices
    • Income Method 1. Compensation of employees 2. Rents 3. Interest 4. Proprietors’ income 5. Corporate income taxes 6. Dividends 7. Undistributed corporate profits 8. Depreciation Gross National Product (GNP) at Factor Cost 9. Add: Indirect taxes 10. Less: Subsidies Gross National Product (GNP) at Market Price 11. Less: Net income earned abroad Gross Domestic Product (GDP) at Market Price
    • Expenditure Method Income Method Consumption © Income from employment Add: Government Spending (G) Add: Income from self-employment Add: Gross Investment (Ig) Add: Gross profits of companies (= Dividend + Corporate income tax + Undistributed corporate profits) Add: Exports (E) Add: Interest Less: Imports (M) Add: Rent Gross National Product (GNP) at Factor Cost Add: Indirect taxes Less: Subsidies Gross National Product (GNP) at Market Price Less: Net factor income from abroad Gross Domestic Product (GDP) at Market Price Gross Domestic Product (GDP) at Market Price
    • Gross Domestic Product (GDP) at Market Price Less: Indirect taxes Add: Subsidies Gross Domestic Product (GDP) at Factor Cost Add: Net factor income from abroad Gross National Product (GNP) at Factor Cost Depreciation Net National Product (NNP) at Factor Cost (= National Income) Less: (Corporate income tax + Social security contributions) Add: Transfer payments Personal Income Less: Personal taxes Disposable Income
      • Non-market production
      • Imputed values
      • Underground economy
      • Leisure and human cost
      • Double counting
      Difficulties in Measuring the National Income
    • Uses of National Income Statistics
      • An instrument of economic planning and review
      • A means of indicating changes in a country’s standard of living
      • A means of comparing the economic performance of different countries
      • An indicator to appraise the changes in the economic growth of a country
    • Other Measures of National Income
      • National Income (NNPFC) [income earned]
      • Personal Income (PI) [income received]
      • Disposable Personal Income
      • Personal Savings