GDP/GNP components
Generally the largest portion of national income
What is Consumption?
Payments to and receipts from foreigners
What is Balance of Payments?
On the U.S. BoP:
Levi's exports $2 million worth of jeans to a company in Germany that pays with cash.
What are a Current Account Credit of $2 million and a Financial Account Debit of $2 million?
Cashflow from individuals to financial institutions
What is household savings?
Doesn’t account for population size
What is a problem with GDP?
Currently near 30 trillion dollars
What is the U.S. GDP?
Theoretically equals zero
What is the current account plus the financial account plus the capital account?
On the U.S. BoP:
A US engineering company does consulting work in Saudi Arabia for 6 months, is paid $20m.
What are a Current Account Credit of $20 million and a Financial Account Debit of $20 million?
Cashflow from firms to financial institutions
What is business savings?
Used to make BoP accounts balance
What is the statistical discrepancy?
Includes income payments and receipts and unilateral transfers
What is GNP?
Includes things like dishwashers, automobiles, and mangos
What is the current account?
or
What is merchandise?
On the U.S. BoP:
General Motors imports $25 million in steel from India and exports $20 million in vehicles to India. India uses the rest of the income to purchase stock in GM.
What are a Current Account Debit of $25 million, a Current Account Credit of $20 million, and a Financial Account Credit of $5 million?
The difference of taxes, redistribution, and government spending
What is government savings?
The reason MNFs allocate their intellectual property (IP) assets to Ireland
What is a low corporate tax rate?
Currently between 4.5 and 5 trillion dollars
What are Government Spending and Investment?
or
What is Investment?
or
What is Government Spending?
Currently about negative 800 billion dollars
What are the net flows of the current account of the United States?
On the U.S. BoP:
Blackrock purchases $1 million of stock from a Unilever SEO. Unilever deposits the proceeds into its account at Citibank.
What are a Financial Account Debit of $1 million, and a Financial Account Credit of $1 million?
The difference between imports and exports
The top two countries that own U.S. debt
What are Japan and China?
Caused a significant decrease in relative consumption and increase in relative government spending
What is World War II?
Has been a mathematical conundrum to economists for decades
What is the global current account discrepancy?
On the U.S. BoP:
At the beginning of the year, the country of Zootopia purchases $2 billion dollars of gold from Newmont Corporation, a gold mining company based in Colorado, using a loan from Bank of America. By the end of the year, Zootopia defaulted on the loan and still owed $500 million, which was written off by Bank of America.
What are a Current Account Credit of $2 billion, a Financial Account Debit of $2 billion, a Current Account Credit of $2 billion, a Financial Account Debit of $2 billion, Capital Account Debit of $500 million, and a Financial Account Credit of $500 million?
(SP−I) + (IM−EX) = (G+TR−T)
What is the twin deficit identity?
Known as the factors of production
What are land, labor, capital, and entrepreneurship?