A Macroeconomic study Measuring the U.S. Economy

Measuring the Economy Why is the Economy constantly studied and measured? How might an Economist study the economy? What factors would they look at to determine the economy’s progress?

Measuring the Economy National Income Accounting – measurement of the national economy’s performance; dealing with the output and income of the economy Five Statistics that measure the national Economy 1. Gross Domestic Product 2. Net Domestic Product 3. National Income 4. Personal Income 5. Disposable Personal Income

Gross Domestic Product GDP – total dollar value of all final goods and services produced in a nation in a single year. How might GDP be calculated? What do economists measure? How does U.S. compare to the rest of the world? GDP (current US$) $14.99 trillion 2011 Population, total million GDP per Capita 48,112

GDP PER CAPITA

Measuring GDP Four Categories of Calculating GDP 1. Consumer Sector (goods and service bought by consumers) 2. Investment Sector (purchases of goods used to produce consumers goods) 3. Government Sector (purchases of federal, state, and local gov.) 4. Net Exports (diff. between exports and imports) Is GDP an accurate measurement of the U.S. economy?

Net Domestic Product NDP- GDP minus the total value lost through depreciation on equipment. Depreciation: loss of value because of wear and tear to durable goods and capital goods.

National Income NI- total income earned by everyone in the economy. Sum of all incomes including…. Wages and salaries Income of self-employed Rental income Corporate profits Interest on saving and investments

Personal Income and Disposable Personal Income PI- total income that individuals receive before personal taxes are paid. DPI- income remaining before people to spend or save after all taxes have been paid