This slid will help to the student to understand the four sector model of Macro economics.

2. DEBASISHBISWAS
Course Instructor
Course: Macro Economics
Section: K
AIUB
Where Leader are Created

3. Islam Shah Syful 09-13027-1
Sozib Md. Habibur Rhaman 08-12419-3
Alam Md. Toushikul 09-12855-1
Haque Mohammad Ashikul 09-13015-1
Uddin Syed Sarwer 09-13010-1
PREPERED BY

4. The gross domestic product (GDP) is a basic
measure of a country's overall economic
output.
 It is the market value of all final goods and
services made within the borders of a country
in a year
MEASURING GROSS DOMESTIC
PRODUCT

5. There are three approaches to measure
gross domestic product (GDP)
 Two sector models
 Three sector model
 Four sector model

6. Two sector
models
 Two sectors model known as classic model
 In two sector model house hold input
money to the farm by expenditure and farm
give money to the household by wages,
Interest, Rent, and Profit

7. Y = C
A person gets 3000tk wages, 5000tk
interest, 500rent from a business farm.
On the other hand, the business farm
gates 8500tk by his expenses.

8. Spending
Goods and
services
bought
Revenue
Goods
and services
sold
Labor, land,
and capital
Income
= Flow of inputs
and outputs
= Flow of dollars
Factors of
production
Wages, rent,
and profit
FIRMS
•Produce and sell
goods and services
•Hire and use factors
of production
•Buy and consume
goods and services
•Own and sell factors
of production
HOUSEHOLDS
•Households sell
•Firms buy
MARKETS
FOR
FACTORS OF PRODUCTION
•Firms sell
•Households buy
MARKETS
FOR
GOODS AND SERVICES
Copyright © 2004 South-Western
Two sector models
Diagram

9.  On other diagram we see that saving go in
to capital market and it’s tarn in to in
vestment.
Y = C + S
Y = C + I
S = I

10.  A person gates 8000tk wages, 15000tk
interest, 1000rent from a business farm.
On the other hand the business farm
gates 15000tk by his expenses and
9000tk by investment
Y = C + I

11. Spending
Goods and
services
bought
Revenue
Goods
and services
sold
Labor, land,
and capital
Income
= Flow of inputs
and outputs
= Flow of dollars
Factors of
production
Wages, rent,
and profit
FIRMS
•Produce and sell
goods and services
•Hire and use factors
of production
•Buy and consume
goods and services
•Own and sell factors
of production
HOUSEHOLDS
•Households sell
•Firms buy
MARKETS
FOR
FACTORS OF PRODUCTION
•Firms sell
•Households buy
MARKETS
FOR
GOODS AND SERVICES
Copyright © 2004 South-Western
Investment
Capital Market
Saving

12. Three sector
model
 This model is like two sector model hear
it include government. Hear govern takes
direct & indirect taxes from people &
business firm and expense where needed

13. Y = C + I + G
 A person gates 8000tk wages, 15000tk
interest, 1000rent from a business farm.
And give tax 3600. On the other hand the
business farm gates 13200tk by his
expenses and 7200tk by investment and
government invest 3600tk.

14. fig
Factor
payments
Consumption of
domestically
produced goods
and services (Cd)
Investment (I)
Government
expenditure (G)
BANKS, etc
Net
saving (S)
GOV.
Net
taxes (T)

15. Four sector
model
 Four sector models like three sector
model except it has included foregone
exchange here government and business
farm import goods, services and man
power and export goods, services and
man power. The balance of import &
export business is called XN

16. Y = C + S + G + Xn
Xn = the balance of foreign trade
( Export – Import )

17. fig
Factor
payments
Consumption of
domestically
produced goods
and services (Cd)
Investment (I)
Government
expenditure (G)
Export
expenditure (X)
BANKS, etc
Net
saving (S)
GOV.
Net
taxes (T)
XN
Import
expenditure (M)