Read the summary and the most important questions on International Finance Theory and Policy, Global Edition | 9781292065199 | Paul Krugman; Maurice Obstfeld; Marc Melitz

• 13 National income accounting and the balance of payments

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• Four main aspects in macroeconomics

  Unemployment, saving, trade imbalances & money and the price level.

• Do chimpansees or humans have a better short-term memory?

  Chimpansees!

• Two essential tools in macroeconomics

  National income accounting & balance of payment accounting

• 13.1 The National Income Accounts

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• National income accounting is.. 

  Classifying each transaction that contributes to national income according to he type of expenditure that gives rise to it.

• 13.1.1 National Product and National Income

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• GNP must equal its national income

  every dollar used to purchase goods or services automatically ends up in somebody's pocket. (it is only about the sale of final goods, so it was counted in GNP at the time it was first sold.)

• Which sales are excluded from the GNP?

  Sales of intermediate goods and used goods. (To avoid double counting.)

• 13.1.2 Capital Depreciation and International Transfers

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• Net national product (NNP)

  GNP - depreciation

• 13.1.3 Gross Domestic Product

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• Gross domestic product (GDP)

  measure of national economic activity. It measure the volume of production within a country's borders. GNP = GDP + net receipts of factor income from the rest of the world.

• Net receipts of factor income from the rest of the world primarily include..

  income residents earn on wealth they hold in other countries minus payments residents make to foreign owners of wealth that is located within the domestic country.

• 13.2 National Income Accounting for an Open Economy

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• Open vs closed economy

  In open economies, savings and investment are not necessarily equal, as they are in a closed economy. This occurs because countries can save in form of foreign wealth by exporting more than they import, and they can dis-save(reduce their foreign wealth) by exporting less than they import.