Macroeconomics: GDP calculation by different method.

1. WELCOME TO THE
PRESENTATION

2. Group Members
1)Mohammad Wahidul Haque
 111-11-1906
2)Abul kalam Azad
 111-11-1770
3)Faruqul Islam
 111-11-1779
4)Sohag Parvez
 111-11-1772
5)Monjur Morshed Rahat
 111-11-1774

3. In the united kingdom in 2005,
 Item billion of
pounds
 Wages paid to labor 685
 Consumption expenditure 791
 Taxes 394
 Transfer payments 267
 Profits 273
 Investment 209
 Government expenditure 267
 Exports 322
 Saving 38
 Imports 366
 Required to calculate GDP of the year.

4. Calculation GDP in the United
Kingdom
Items Billions
of Pounds
 Consumption expenditure
791
 Investment
209
 Government expenditure
267
 Net export(export-import) -44
 Total GDP
1223
GDP BY

5. Expenditure Approach
 Measures GDP as the sum of-
1. Consumption Expenditure (C)
2. Investment (I)
3. Government Expenditure (G)
4. Net Exports (X-M)
 C + G + I + NX

6. Explanation
 Personal consumption expenditures
 Gross private domestic investment
 Government expenditure on goods & Services
 Net exports of goods and services

7. Tropical Republic’s quantities produced and
Prices(base year 2005)….
 Quantities 2005
2006
 Bananas 1000 bunches
1100bunches
 Coconuts 500 bunches 525
bunches
Prices
 Bananas $2 a bunch
$3 a bunch
 Coconuts $10 a bunch
$8 a bunch

8. Tropical Republic’s nominal GDP in 2005
Items Quantities Prices
Nominal GDP
Bananas 1000 2
2000 (1000 X 2)
Coconuts 500 10 5000
(500 X 10)
7000
 Tropical Republic’s nominal GDP is $ 7000

9. Tropical Republic’s nominal GDP in 2006
Items Quantities Prices
Nominal GDP
Bananas 1100 3
3300 (1100 X 3)
Coconuts 525 8 4200
(525 X 8)
7500
 Tropical Republic’s nominal GDP is $ 7500

10. Tropical Republic’s real GDP in 2006
using the base year 2005
Items Quantities Prices
Nominal GDP
Bananas 1100 2
2200 (1100 X 2)
Coconuts 525 10 5250
(525 X 10)
7450
 Tropical Republic’s Real GDP is $ 7450.

11. The following events have occurred at times in
the history of the United States.
 A deep recession hits the world economy.
 The world oil price rises sharply.
 U.S. businesses expect future profits to fall.

12. Explanation
 a) A deep recession hits the world economy
 Aggregate demand decreases
 AD curve shifts leftward from AD0 toAD1
 The Economy moves from E0 to E1
 Creating Recessionary Gap.

13.  b) The world oil price rises sharply
 Short run aggregate supply decreases
 SAS curve shifts leftward from SAS0 to SAS1
 Economy moves to the point where SAS1 intersects AD0
 The price level rises to economy
 Real GDP decreases.

14.  c) U.S. businesses expect future profits to fall
 Aggregate demand decreases
 AD curve shifts leftward from AD0 to AD 1
 LAS and SAS remain unchanged
 The economy moves from E0 to E1
 Creating output gap called recessionary gap.

15. In Japan potential GDP is 600 trillion yen and the table
shows aggregate demand and short-run aggregate
supply.
Price Level Real GDP Real
GDP
demanded
supplied
75 600 400
85 550
450
95 500 500
105 450 550

16. Graph of Aggregate Demand

17. Graph of Short run aggregate supply

18. Result
The Potential GDP is 600 trillions of 2000 yen.
The real GDP is 500 trillions of 2000 yen.
Price level is 95 trillions of 2000 yen.

19. ANY QUESTION ???

20. Thank you !!!