Monday

Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed.
PART 9 The Real Economy in the Long Run
Chapter 26 of 36 Saving, Investment, and the Financial System
Section 13 of 25
…
GDP (Y) consists of four components of expenditure
· consumption, C
· investment, I
· government purchases, G
· net exports, NX
So, Y = C + I + G + NX
…
Here we simplify the analysis of GDP by assuming the economy is closed.
A closed economy (within one country) does not interact with other economies.
It does not
-participate in international trade in goods, having no exports nor imports
-participate in international borrowing and lending
Assuming a closed economy is a useful simplification we can use to learn some lessons that apply to all economies.
It can also be considered a model of a completely integrated world economy, with no imports nor exports, as within the U.S.
…
A closed economy does not have international trade imports and exports are zero, so net exports, NX, are zero.
So, in the case of a closed economy we write Y = C + I + G.
Y is the sum of consumption, investment, and government purchases.
Each unit of output produced and sold in a closed economy is consumed, invested, or bought by government.
…
To see what this identity equation says about financial markets subtract C and G from both sides of this equation.
The result is I = Y - C - G
For example, assume these numbers Y = 100, C = 70, I = 10, G = 20.
Here, I = Y - C - G is 10 = 100 - 70 - 20
The I amount 10 also equals national saving.
So, saving S = investment I, savings are investments by definition because it is money not consumed nor spent by government.
… …
a useful simplification
yūyōna tanjun-ka
有用な単純化
… …
For the U.S. what are the current numbers for Y = C + I + G + NX?
ChatGPT:
Using the latest available U.S. national accounts (roughly Q1 2026 / 2025 annualized levels), the GDP identity Y = C + I + G + NX looks approximately like this:
· Gross Domestic Product, Y = $32.4 trillion
· Consumption, C = $22.0 trillion, 68% of GDP
· Investment, I = $5.8 trillion, 18%
· Government purchases, G = $5.6 trillion, 17%
· Net exports (exports minus imports), NX = -$1.0 trillion, -3%

 

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