Transcript File

Economics
Chapter 1
National Income
Measuring indicators


Do you think Hong Kong is a rich city? Why?
In what way do we measure the economic
performance of a city?

Indicators







Income
Employment / Unemployment
Production
Consumption
Price level
Living standard
Freedom
Price ($)

S
In microeconomics,


Price
Quantity
P
D
0

In macroeconomics,


General price level
Aggregate output
Q
Quantity
(units)
General
price
level ($)
AS
P
AD
0
Q
Aggregate
output
(units)
Macroeconomics

Studies the aggregate measures



Price level
National income or output
Unemployment

Money market

Gov’t economic policies

International trade
1.1 National income

Measurement of output

Output or income a region gets from production
within a period of time (usually one year)

Measure the aggregate output by adding up the
market values of different outputs

It shows:


economic development
quality of life
Stock and flow concepts

Stock

Value of output = a quantity measured
at a certain point of time


Wealth = market value of one’s possessions at a
certain point of time
Capital stock = value of capital owned by a firm at a
certain point of time
Stock and flow concepts

Flow

Value of output = a quantity measured
in a period of time (i.e. rate)


Income & expenditure
= inflow and outflow of money in a certain period of time
Investment and depreciation
= increase and decrease in the value capital owned
in a certain period of time
http://www.reffonomics.com/TRB/chapter21/GDP/realgdp4.swf

E.g.



Investment of the year (increase in capital owned)
Depreciation (decrease in capital owned)
GDP is a flow, because it is measured yearly or quarterly.
National income

Measurement of aggregate output

GDP = Gross domestic product

GNP = Gross national product
1.2 Gross Domestic Products (GDP)
I. Measuring the total value of final goods

The total value of production of all resident
producing units of a region in a specific period
(usually a year or quarter).
or

It is the market value of all final goods and
services produced inside a country in a year (or a
quarter).
1.2 Gross Domestic Products (GDP)
II. Resident producing units of a region

Individuals:



Organizations:



People who normally live in the region
E.g. HK citizens
Companies taking the region as the centre of economic
interest
E.g. 7-Eleven
Imported goods are excluded
1.2 Gross Domestic Products (GDP)

Total value of final goods and services.
Intermediate
good
Fish: $400
Final goods
Sushi: $1000
Pay: $1000
Earn: $400


Earn: $1000 - $400 = $600
Value of final goods = $1,000
If value of intermediate and final goods are counted
($400+$1000), it will be double counting ($400)
Items not counted in GDP
1.
Past inventories


2.
Second-hand goods


3.
Not produced within the period
Already counted in the GDP in previous period
Already counted when produced in the first time
Double counting
Unpaid household services for selfconsumption within household


Housework
Caring of own children
Items not counted in GDP
Intermediate products
4.
Goods and services used up as inputs
E.g.




Raw materials
Semi-finished goods
Financial assets
5.


Shares and bonds
Futures and options
Transfer payment
6.


Transfer of wealth, no production involve
E.g. Gov’t subsidy, CSSA
Capital gain
7.


Increase in the market value of an asset, but not production
E.g. Selling the flat with a higher price
Should the following be included in
calculation of GDP in 2010?














Stock of MP3 players produced in 2008
Stock of MP3 players produced in 2010
Sony α3 camera resold in Yahoo! Auction
Canon D5 camera sold in Broadway
Hourly paid private tutor help you revising Economics
You help your brother understanding his Math problems
Adidas football you bought for fun
Adidas football South China Athletics Asso. bought for training
the football players
HSBC shares
Commission to an agent from buying and selling HSBC shares
Clinical voucher (醫療劵) given by the gov’t (without using it)
Clinical voucher (醫療劵) given by the gov’t (after using it)
A person has $2 million gain from selling his ancient flask
Cheung Kong (Holdings) Ltd. gain $1000million from selling the
flats in a new estate
Yes / No
Yes / No
Yes / No
Yes / No
Yes / No
Yes / No
Yes / No
Yes / No
Yes / No
Yes / No
Yes / No
Yes / No
Yes / No
Yes / No
PEQ - HKCEE 1998MC
Which of the following would be considered as part
of the national income?
A. Commissions received by salesmen selling
second-hand cars
B. A gift cheque to a bride for an invitation to her
wedding banquet
C. Insurance compensation to injured workers
D. Scholarships to students with good results in
schools.
15
PEQ - HKCEE 1995MC
Which of the following will NOT be included in Hong
Kong’s GDP?
A. profits earned by individual investors from
buying and selling shares in the Hong Kong
stock market
B. bonuses paid by the Stock Exchange of Hong
Kong Limited to its staff
C. stamp duty levied on the shares bought and sold
in the Hong Kong stock market
D. commissions paid to the brokers for transactions
in the Hong Kong stock market
16
PEQ - HKCEE 1992MC
The expenditure by the Hong Kong government on
Vietnamese boat people _____ included in Hong
Kong’s GDP because _____
A. should be; goods and services are produced in
Hong Kong
B. should be; part of the expenditure will be paid
back by the United Nations
C. should NOT be; goods and services are spent
on foreigners
D. should NOT be; Vietnamese boat people do not
produce goods and services
17
PEQ - HKDSE Practice Paper
Mr. Richardson, a British civil engineer, has worked for a large
Hong Kong construction company for the past few years. He is
earning an annual income of HK$800 000 and he remits part of his
income to his family in Britain. Is Mr. Richardson’s income
counted in HK’s gross domestic product (GDP)? Explain
your answer. (3 marks)
Answer:
 His income is counted in HK’s GDP (1)
 because it is derived from the current production carried
out by a resident producing unit in Hong Kong. (2)
18
B. Basic concept of measuring GDP
Income = $50
Output value = $50
Expenditure = $50
Output value = Expenditure = Income
B. Basic concept of measuring GDP
I. Three approaches for GDP
1. Expenditure approach

2.
Production approach

3.
Final goods
Output value of producing units
Income approach

Factor income
Basic concept of measuring GDP
II. GDP at market price and factor cost
GDPMP = GDPFC + Indirect taxes – Subsidies
Given: Unit tax = $1200 and Subsidy = $200
Output value
$3000
Expenditure
$4000
GDPFC
GDPMP
Income
$3000
Tax
$1200
Subsidy
$200
Tax
$1200
Subsidy
$200
III. Expenditure approach
1.
2.
Total expenditure on final goods
Subtract (not include) the value of imports
GDP = C + I + G + X - M
Import
Export
Gov’t expenditure
Gross Investment expenditure
Private consumption expenditure
III. Expenditure approach
C - Private consumption expenditure (C)

Household expenditure on goods and services
G - Government consumption expenditure



Compensation of civil servants (e.g. salary)
Purchasing good or services
Not include: transfer payment
III. Expenditure approach
I - Gross investment expenditure (I)

Capital formation
Change in inventories
Depreciation included

Gross investment (I)


= Gross domestic fixed capital formation + Change in inventory
= Net domestic fixed capital formation + Depreciation + Change in inventory
= Net investment + Depreciation
III. Expenditure approach
X - Exports


Selling goods or services to foreign countries
Total exports = Xgoods + Xservices + Xre-exports
M - Imports


Purchasing goods or services from foreign countries
Total import = Mgoods + Mservices
Net exports (NX) = X - M
III. Expenditure approach

The net domestic product (NDP)


Equals the gross domestic product (GDP) minus
depreciation on a country's capital goods.
Capital that has been consumed over the year


Capital consumption allowance


in the form of housing, vehicle, or machinery
deterioration.
the amount of capital that would be needed to replace
those depreciated assets.
NDP = GDP - Depreciation
Try it.
Is it included
in the GDP?
C
I
G
a. Commission paid for the purchase of a
second-hand private car
Yes / No
b. Expenditure on shares
Yes / No
c. Market value of a T-shirt produced last
year but which remained unsold this year
Yes / No
-
d. Expenditure of a firm on a sewing
machine currently produced (investment)
Yes / No
+
e. Compensation (Services provided) paid to a
traffic accident victim
Yes / No
f. Foreign expenditure on domestic exports of
toys
Yes / No
g. Expenditure on an imported computer
Yes / No
X
M
+
+
+
-
Calculate GDP (p.16)
Components
$ Billion
Private consumption expenditure
80
Government consumption expenditure
20
Gross domestic capital formation
15
Changes in inventories
-8
Total domestic exports of goods
100
Total re-exports of goods
15
Total imports of goods
80
Total exports of services
13
Total imports of services
20
Indirect taxes less subsidies
4
Net exports = X – M
= (Xgoods + Xservices + Xre-exports )– (Mgoods + Mservices)
= $[(100 + 13 + 15 ) – (80 + 20)] billion= $28 billion
GDP = C + I + G + X – M
= $ ( 80 + 15 - 8 + 20 + 100 + 15 + 13 – 80 – 20 ) billion
= $ 135 billion
Calculate GDP
Components
$ Billion
Private consumption expenditure
230
Government consumption expenditure
120
Gross domestic fixed capital formation
90
Changes in inventories
-30
Domestic exports of goods
100
Re-exports of goods
220
Imports of goods
350
Exports of services
90
Imports of services
110
Indirect taxes less subsidies
20
GDP = C + I + G + X – M
= $ ( 230 + 90 – 30 + 120 + 100 + 220 – 350 + 90 – 110 ) billion
= $ 135 billion
Calculate GDP
Components
$ Million
Private consumption expenditure
500
Government consumption expenditure
100
Net domestic fixed capital formation
250
Changes in inventories
30
Total exports of goods
800
Re-exports of goods
200
Imports of goods
900
Exports of services
300
Imports of services
150
Depreciation
60
(HKCEE 2001)
GDP = C + I + G + X – M
= $ ( 500 + 250 + 30 + 60 + 100 + 800 – 900 + 300 – 150 ) billion
= $ 990 billion
IV. Production (Value added) approach



The sum of value added of all resident
producing unit.
Counting of value from one production stage to another
The value of intermediate goods will be counted.
Value added = Gross output value – Intermediate consumption
A
B
$500
Value added by
C
$800
B
= $800 – $500 = $300
IV. Production (Value added) approach

E.g.
$200
$850
Carpenter
Factory
Value of timber sold
from carpenter to
factory
$1800
Shop
Value of sofa sold
from factory to retailer
Household
Value of sofa sold from
retailer to household
Gross output
value
-
Intermediate consumption =
Value added
Carpenter
$200
-
$0
=
$200
Factory
$850
-
$200
=
$650
Shop
$1800
-
$850
=
$950
GDP = Value added of all producing units = Expense on the final product =
$1800
PEQ - HKCEE 2005MC
A production chain is shown below.
The contribution of the above production chain to
Hong Kong's GDP is
Calculation:
A. $1 400
HK’s GDP = ($700 + $800 - $200) + ($1400 - $700)
+ ($1200 - $800)
B. $1 700
= $2400
C. $2 400
D. $2 600
33
PEQ - HKCEE 2004MC
The following diagram shows a production process
of an economy.
What is the contribution of Amy's garment factory to
the national income of the economy?
Calculation:
A. $1 600
Amy’s contribution = ($4300 + $2000) - ($600 + $400)
B. $3 700
= $5300
C. $5 300
D. $5 900
34
IV. Production (Value added) approach

E.g.
$850
$300
Farmer
Factory
Smoker
$200





Market price of cigar = $850,
Tax to Gov’t = $200
Factory receives from smoker
= $850-$200 = $650
Value added by the factory =
$650 - $300 = $350
Consider production only:
GDPFC = $300 + $350 = $650
Consider also the tax:
GDPMP = $300 + $350 + $200
= $850
Tax to Gov’t
Consider production only:
GDPFC
= Sum of value added
of all resident
production units
Consider the market value
GDPMP = GDPFC + Indirect tax - Subsidies
GDP from value added and
expenditure approaches
Indirect tax less
subsidies
Private
consumption
expenditure (C)
Gross
investment
expenditure (I)
GDPFC
Value added of all
producing units
GDPMP
Government
consumption
expenditure (G)
Export (X)
[Goods and
services]
GDPMP = GDPFC+ Indirect tax - Subsidies
GDPMP = C + I + G + X - M
Advantages of value added approach
1.
Difficult to distinguish final goods and intermediate goods

E.g. A chef buys a fish. The fish can be:



2.
Final goods – if the chef enjoy himself.
Intermediate goods – if he cook the fish and sell it.
So, value added is better than expenditure approach
Avoid double counting

All value added are counted for once.
Example (p.20)


The diagram below shows the operation of C&K Furniture.
Its total sales revenue is $6,600.
Local made furniture
$3,000
Imported furniture
$1,000
C&K Furniture
Change in inventory
- $800
Local consumers
Sales revenue
$6,600
(indirect tax inclusive)
1. a. GDP contributed by C&K = ?
b. Why the contribution is lower than the total revenue?
2. Tax rate = 10% of the sales.
Indirect tax = ?
C&K’s contribution to GDPFC = ?
Example (p.20)
The diagram below shows the operation of C&K Furniture.
Q.1
a.
GDP contributed by C&K
= $6,600 - $800 - $3,000 - $1,000
= $1,800
b.
The value added of other producing units (local and foreign furniture
suppliers) and the value of the sold inventories must be subtracted from
the total sales to get C&K’s contribution to GDP.

Consider the market value
GDPMP = GDPFC + Indirect tax - Subsidies
Q.2
Let y be the sales (or value of goods)
Market value = Sales + Tax = $6,600
y + (y x 10%) = 6600
y = 6000,  Indirect tax = $6000 x 10% = $600
GDPFC (contributed by C&K) = GDPMP (by C&K) – Indirect tax
= $1,800 - $600 = $1,200
PEQ - HKCEE 2006MC
The following table shows the statistical data of an
economy.
The GDP at factor cost (in $mn) is
Calculation:
A. $ 950
Step 1:
GDPMP = C + I + G + NX
B. $ 970
= $(200 + 300 -70 + 50 +150 + 300) mn
= $930mn
C. $ 1050
Step 2:
GDPMP = GNPFC + Indirect tax - Subsidies
D. $ 1190
GDPFC = GDPMP - Indirect tax + Subsidies
GNPFC = $(930 – 0 + 120)mn = $1050mn
40
III. Income approach (out of syllabus)

The sum of all factor incomes

Compensation



Return for the labour resources
E.g. Salaries, bonus, commission, housing allowance…
Gross operating surplus


Return to company’s capital and entrepreneurship
E.g. Dividends, interests, shares…
IV. Per capita GDP

GDP divided by population




to study the living standard of the region
to eliminate the factor of population difference
can reflect the amount every person can get on average
E.g. Given in country A:


GDP = $5000 million
Population = 10 million persons
V. Growth rate

% gain or lose in GDP



E.g. Given in country A:



To study the economic growth
To forecast the economic situation, so that to make
appropriate decisions
GDP2010 = $5000 million and GDP2009 = $4000 million
Economy with GDP growth rate > 10% is consider well
economic growth
PRC Gov’t aims at 8% growth in recently years
1.3 Gross National Product (GNP)
Gross Domestic Product (GDP) of HK
HK citizen
Foreigner
Production in HK
Gross National Product (GNP) of HK
HK citizen
HK citizen
Production in HK
and
Production in other countries
1.3 Gross National Product (GNP)

The total income earned by residents from engaging in
economic activities in a given period of time.

Assume GNP of Hong Kong in 2010:
All income earned by Hong Kong residents (both living in or
outside HK) in year 2010.

GDP
= Income of local residents in HK + Income of foreigners in HK
GNP
= Income of local residents in HK + Income of residents overseas

B. The relationship between GDP and GNP

So, when calculating GNP,
 income of HK residents (living in HK)
income of HK residents (living overseas)
GNP
=
GDP
+
Factor
income
from
abroad
-
Factor
income
paid
abroad
income of foreigners who’re living in HK (< 2 yrs)
B. The relationship between GDP and GNP
GNP
=
GDP
+
GNP
=
GDP
+
Factor
income
from
abroad
-
Factor
income
paid
abroad
Net factor income
from abroad
C. Factor income from and paid abroad

Factor income from abroad (inflow)



Compensation of employees (domestic residents working overseas)
E.g.
HK people working in Japan with short-term contract
(income not included in GDP, but in GNP)
Factor income paid abroad (outflow)


Compensation of employees (foreign residents working in local)
E.g.
US lecturer working in HK for 6 months
(income included in GDP, but not in GNP)
C. Factor income from and paid abroad

Factor income from abroad (inflow)



Investment income (domestic residents invest overseas)
E.g.
HK people gain profits from selling flats in US
(income not included in GDP, but in GNP of HK)
Factor income paid abroad (outflow)


Investment income (foreign residents invest in local)
E.g.
US investor earn profit from his computer retailer shop in HK
(income included in GDP, but not in GNP of HK)
C. Factor income from and paid abroad


Assume GDP of HK in 2010 is $100 million.
Inflow



Outflow



HK citizens gain $30million profit from investment in US
HK salesmen earn $5 million income from a short-term contract in Japan
A UK citizen earn $1 million income for lecturing in HK University
An Italian business gain $10 million by investing a restaurant in HK
GNP = GDP + Income from abroad – Income paid abroad
= [$100 + ($30 + $5) – ($1 + $10) ]million
= $124 million
Gross National Product (GNP)
$ Million
Private consumption
200
Gross Investment
250
Gov’t expenditure
100
Exports
80
Imports
30
Indirect business tax
10
Subsidies
Net income from abroad
GDP at market price
=C+I+G+X–M
= ($200+$250+$100+$80-$30)million
= $600 million
5
15
GNP
= GDP + Net income from abroad
= ($600 + $15) million
= $615 million
GDPMP = GDPFC + Indirect taxes – Subsidies
$600million = GDPFC + ($10 - $5)million
GDPFC = ($600 - $10 + $5) million
So, GDP at factor cost = $595 million
PEQ - HKCEE 1996MC
The GDP at factor cost is:
Calculation:
A. $ 95
Step one:
GNPMP = GNPFC + Indirect tax - Subsidies
B. $ 105
GNPFC = GNPMP - Indirect tax + Subsidies
GNPFC = $100 - $25 + $35 = $110
C. $ 115
Step two:
GNPFC = GDPFC + Net income from abroad
D. $ 125
GDPFC = GNPFC - Net income from abroad
GDPFC = $110 – (-$5) = $115
52
1.4 Nominal and Real GDP
A. Basic concept of nominal GDP
 In principle


GDP = total market value at market price
Measures “of the current period”




i.e. GDP at current market prices
Specified as: Nominal GDP
General formula = P x Q
where P=Current price
Year
Output
(units)
Price
($)
Nominal GDP ($)
(Price x Output)
2000
100
10
$10 x 100 = $1000
2001
100
12
$12 x 100 = $1200
2002
100
14
$14 x 100 = $1400
From above date


Nominal GDP
but overall production remains unchanged
1.4 Nominal and Real GDP
B. Calculation of real GDP
 To compare the output of different period
 Assume the price is constant




i.e. GDP at constant market prices
Specified as: Real GDP
General formula = P0 x Q
where P0= Price in the base year
Year
Output
(units)
Price
($)
P0
($)
Real GDP ($)
(Price x Output)
2000
100
10
10
$10 x 100 = $1000
2001
100
12
10
$10 x 100 = $1000
2002
100
14
10
$10 x 100 = $1000
From above date, Real GDP remains unchanged even though the
current price 
Real GDP (textbook p.28)
Year
Apple output
(units)
Price
($)
Watermelon output
(units)
Price
($)
2000
2,000
10
2,000
20
2004
1,000
15
1,800
25








GDP of 2000 at current market price = $10x2,000 + $20x2,000 = $60000
GDP of 2004 at current market price = $15x1,000 + $25x1,800 = $60000
Nominal GDP2004 = Nominal GDP2000
It can’t reflect changes in output because changes in price also affect GDP at
current market price
Base year = 2000
GDP of 2000 at constant price
GDP of 2004 at constant price
Real GDP2004 < Real GDP2000
= $10x2,000 + $20x2,000 = $60,000
= $10x1,000 + $20x1,800 = $46,000
Finding Real GDP from Nominal GDP

Year
Price index
Nominal GDP ($billion)
2006
100
$20
2007
110
$22
Quantity
Example (textbook p.29)

Year
2007
2008
Price index
100
105
Nominal output value ($)
12,000
12,810
Quantity
Example (textbook p.29)

Q.2 If real GDP increases by 1.4% and nominal GDP
decreases by 2%, how will the price index change?
Answer:
Real GDP = Nominal GDP x
𝑷𝒓𝒊𝒄𝒆 𝒊𝒏𝒅𝒆𝒙 𝒐𝒇 𝒕𝒉𝒆 𝒃𝒂𝒔𝒆 𝒚𝒆𝒂𝒓
𝑷𝒓𝒊𝒄𝒆 𝒊𝒏𝒅𝒆𝒙 𝒐𝒇 𝒄𝒖𝒓𝒓𝒆𝒏𝒕 𝒚𝒆𝒂𝒓
𝑹𝒆𝒂𝒍 𝑮𝑫𝑷
𝑷𝒓𝒊𝒄𝒆 𝒊𝒏𝒅𝒆𝒙 𝒐𝒇 𝒕𝒉𝒆 𝒃𝒂𝒔𝒆 𝒚𝒆𝒂𝒓
=
𝑵𝒐𝒎𝒊𝒏𝒂𝒍 𝑮𝑫𝑷
𝑷𝒓𝒊𝒄𝒆 𝒊𝒏𝒅𝒆𝒙 𝒐𝒇 𝒄𝒖𝒓𝒓𝒆𝒏𝒕 𝒚𝒆𝒂𝒓
𝟏𝟎𝟏.𝟒
𝟏𝟎𝟎
=
𝟗𝟖
𝑷𝒓𝒊𝒄𝒆 𝒊𝒏𝒅𝒆𝒙 𝒐𝒇 𝒄𝒖𝒓𝒓𝒆𝒏𝒕 𝒚𝒆𝒂𝒓
Price index of current year =
𝟏𝟎𝟎 𝒙 𝟗𝟖
𝟏𝟎𝟏.𝟒
= 96.65
Price index decreases by = 100 – 96.65 = 3.35

Further explanation
1.5A Uses of national income statistics
1.
To assess the economic performance of an economy
 Real GDP
 measures the change of aggregate output.
 Growth rate of real GDP
 the economic growth.
 how fast an economy expends
 if negative, shows financial crisis
 Investment expenditure
 prediction to boost future consumption
 evaluate economic development
1.5A Uses of national income statistics
2.
Understand economic structure and changes
% of GDP in 1986
% of GDP in 2006
/
0.52%
0.06%
Significant 
20.57%
3.10%
Sharp 
Electricity, fuel gas and
water supply
2.83%
2.73%
More or less
the same
Construction
4.42%
2.62%
Significant 
66.57%
87.91%
Sharp 
Industries
Agriculture, fishery,
mining and quarrying
Manufacturing
Service

From above data,
 importance of tertiary production
 importance of primary and secondary production
1.5A Uses of national income statistics
3.
To reflect the economic welfare
 Per capita GDP
 aggregate output a person can enjoy on average
 Components in expenditure approach
 how aggregate output is used for:



4.
Private consumption?
Public consumption?
Net export?
To facilitate international comparison
 Real GDP
 which countries / regions have good economic performance?
1.5A Uses of national income statistics
5.
To provide information for the gov’t in making economic policies
 Growth rate of real GDP
 more intensive polices to stimulate economic growth
 Components in expenditure approach
 which components show difficulties?


6.
Private consumption   Tax allowance to stimulate consumption
Net export  formulate international trading policies, e.g. CEPA
To help firms make production and investment decision
 Growth rate of value-added of different economic sectors
 make business plan and efficient investment
1.5B Limitations of national income statistics
1.
Differences in population, price and components of goods
 Consider GDP only:





Assume nominal GDP = $10million in both economy
Population of Country A = 5,000 persons
Population of Country B = 100,000 persons
Country A has better living standard.
Case study on textbook p.33
1.5B Limitations of national income statistics
2.
Exclusion of unpaid household services for self consumption
 Production does improve living standard
 GDP under-estimates economic welfare
3.
Underground (or hidden) economic activities
 illegal production (e.g. smuggling and piracy)
 unreported production (e.g. retailing of hawker and private tutoring)
 Non-marketed production (e.g. farming for self-consumption)
 GDP may not fully reflect economic welfare
1.5B Limitations of national income statistics
4.
The value of leisure time
 not included in GDP calculation
 GDP can’t reflect the living standard
 if Country A and B have the same figure,
more the leisure time  higher the living standard
5.
Difference in income distribution
 uneven income distribution
 per capita GDP over-estimates the general living standard of the
poor
1.5B Limitations of national income statistics
6.
Externalities
 GDP does not reflect external cost from production (e.g. pollution)
 GDP over-estimates the living standard
7.
Changes in price level
 Nominal GDP does not take away the effect of inflation
 Nominal GDP over-estimates the living standard
 Need to make use of real GDP, but more complicated in calculation
8.
Composition of output
 Private and public consumption  better living standard
 investment or net export  no effect on improving living standard
 GDP as a figure can’t fully reflect the living standard