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Chapter 13

 

National Income Accounting and the Balance of Payments

 

Why individual countries fortune differs? Example different circumstances after the recession (China slow growth, USA contradicting effect)

Definition:

Microeconomics: Studies how individual economic actors collectively determine how resources are used

--->International microeconomics study example--> how individual production and consumptions decisions produce patterns of international trade and specialization 

--> government intervention or market failures can cause waste even when all the factors of production are fully in use. 

 

Macroeconomics: Studies how economies overall levels of employment, production, and growth are determined. Studies the behaviour of an economy as a whole. 

--> We will learn how the interaction between different national economies affect the worldwide pattern of macroeconomic activity. 

 

Studies four aspects of economic life:

Unemployment, Saving, Trade imbalance and Money & The price level. 

 

National Accounting concepts; production and international transactions

two tools:

1.national income accounting: records all the expenditures related to a country'es income and output. 

2. balance of payments accounting; informs about the country's debts to foreigners and fortunes of its exports and import-competing industries. Shows also the connection between foreign transactions and national money supply. 

 

National Income accounts: