HAT Manifesto Part 1/3 - Rubric Cube - 250803 edit

 

Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed.

PART 8 The Data of Macroeconomics

Chapter 23 of 36 Measuring A Nation’s Income

Section 10 of 17

…

Table 1 here

…

Table 1 – Gross domestic product (GDP) and Its Components

· this table shows total GDP for the U.S. economy in 2007

· the breakdown of GDP among its four components

…

GDP consists of four components

· consumption spending (C)

· investment spending (I)

· government purchases (G)

· net exports (NX)

The equation for GDP is Y = C + I + G + NX

…

Government purchases (G)

Includes spending by all local, state, and federal governments on

· goods and services

· public works

· salaries of government workers

When the government pays the salary of an Army general or a schoolteacher, that salary is part of government purchases and part of the GDP calculation.

…

When the government pays a Social Security benefit or an unemployment insurance benefit, these are not considered purchases but rather transfer payments.

This is because they are not made in exchange for a currently produced good or service.

They alter household income but do not alter the economy's production.

From a macroeconomic view transfer payments are payback of taxes = negative taxes.

…

Net exports (NX)

Net exports equal

· exports, foreign purchases of domestically produced goods

· minus imports, domestic purchases of foreign goods

It is net because imports are subtracted from exports.

This subtraction is made because other components of GDP include imports of goods and services.

For example, consumption (C) includes consumer goods made in Germany.

Suppose a household buys a $30,000 car from Mercedes, the German carmaker.

This transaction increases consumption by $30,000 because car purchases are part of consumer spending.

It reduces net exports by $30,000 because the car is an import

…

Table 1 shows U.S. net exports were -$712 billion, -$2,360 per person.

Net exports are negative because

· Americans spent more on foreign-produced goods

· than foreigners spent on U.S.-produced goods

… …