The world's funniest economics stories

Chapter 2 There are no rich people who don't understand the economy, and there are no poor people who don't understand the economy (1)
There are no poor people who understand the economy

1. The social wealth created by "eating shit" - GDP
Can eating shit create 1 million GDP?Let's see a joke.

Economics graduate students A and B were walking together on the road when they noticed a pile of dog shit not far in front of them.Looking at the shit, A said to B: You eat it, I will give you 5000 million.Hearing this, B pondered for a while and thought: If he can make 5000 million so easily, it will stink, and at worst, he will go to gastric lavage if he gets the money.Thinking about it, he ate up the shit.

The two continued to walk forward. Although they were talking and laughing, they were inevitably a little unbalanced in their hearts.A lost 5000 million in vain, while B earned 5000 million, but the thought of eating shit made him feel uncomfortable.

At this time, they found another pile of dog shit not far away.In order to find a little psychological balance for himself, B pointed to the shit and said to A: You eat it, and I will give you 5000 million.A is a little hesitant, but when he thinks that he can earn back the 5000 million he lost before, he doesn't care anymore.Didn't B also eat it?So A also ate the shit.

Now, both of them are psychologically balanced.However, as they continued to move forward, they felt that something was wrong. The capital of the two did not increase at all, but each of them ate a pile of shit.

Finally they decided to go to the professor to tell.After listening to their words, the professor kindly comforted them and said: Students, you should be happy, because you have contributed 1 million GDP to our country by eating only two piles of shit!

Although it is a joke, after laughing, we can deeply feel that whether it is the two students or the professor, their lack of understanding of GDP directly led to the production of the joke.In order to avoid such jokes from appearing in our lives, it is necessary for us to have a basic understanding of GDP.

GDP, that is, gross domestic product, refers to the value of all final products and labor services produced in the economy of a country or region within a certain period of time [a quarter or a year]. best indicator.It can not only reflect a country's economic performance, but also reflect a country's national strength and wealth.

In general, GDP has four distinct components, which include consumption, private investment, government spending, and net exports.

GDP is expressed as: GDP = CA + I + CB + X.In the formula: CA is consumption, I is private investment, CB is government expenditure, and X is net export.Its calculations are:
Production method: GDP = ∑ total output of each industry sector - ∑ intermediate consumption of each industry sector

Income method: GDP = ∑ labor compensation for each industry sector + ∑ depreciation of fixed assets for each industry sector + ∑ net production tax for each industry sector + ∑ operating profit for each industry sector
Expenditure method: GDP = total consumption + total investment + net expenditure

For graduate students A and B, they neither provided the country with tangible goods such as food and clothing, nor paid for services in science, education, culture, and health.After everyone ate a pile of shit, none of them produced more value, and the money in their hands was not compromised at all. Compared with before, there was neither profit nor profit at all, let alone investment.

Therefore, they just ate two piles of garbage that could not be counted in GDP, and they did not create value as the professor said.

Regarding GDP, American economist Samuelson believes that GDP is one of the greatest inventions of the 20th century.He likens GDP to a satellite image of the weather, which can provide a complete picture of economic conditions and help leaders judge whether the economy is shrinking or expanding, whether it needs stimulus or control, whether it is in a deep recession or under the threat of inflation.Without an aggregate measure like GDP, policymakers would be overwhelmed by a sea of ​​disjointed numbers.

It can be seen that GDP is like a barometer of the macro economy, measuring the economic performance of all countries and regions.In the international community, a country's GDP is closely related to the country's international obligations and preferential treatment.

For example, when the United Nations decides a country's membership dues, it should be based on its "6 consecutive years of GDP and per capita GDP"; when the World Bank decides on the preferential treatment such as hard loans and soft loans that a country can enjoy, it is also based on "per capita GDP". The importance of GDP can be seen.

However, after all, GDP is only an index of the macro economy, has its own limitations, and cannot accurately reflect all problems in economic development. Behind the growth of GDP figures, there may be waste and destruction of resources and environment, as well as waste of human and material resources.

GNP, Gross National Product, refers to the final result of the initial distribution of income of all resident institutional units in a country [region] within a certain period [annual or quarterly].The added value [Gross Domestic Product] created by a country’s resident institutional units engaged in production activities is mainly distributed to the country’s resident institutional units in the initial distribution process, but part of it is also distributed to the country in the form of labor compensation and property income. non-residential institutional units.

At the same time, part of the added value created by foreign production units is distributed to the resident institutional units in the country in the form of labor compensation and property income.Thus came the concept of gross national product, which is equal to gross domestic product plus labor remuneration and property income from abroad minus labor remuneration and property income paid to foreign countries.

There are three methods of calculating GNP:
[1] The production method [or departmental method] is to subtract intermediate products and labor service consumption from the total output value [income] of each department to obtain the added value.The sum of the added value of each sector is the gross national product;
[2] Expenditure method [or final product method], that is, personal consumption expenditure + government consumption expenditure + gross domestic asset formation [including fixed capital formation and net increase or decrease in inventory] + the difference between exports and imports;

[3] The income method [or distribution method] regards the gross national product as the total added value created by various factors of production [capital, land, labor].

Therefore, it must be distributed among the various factors of production in the form of wages, interest, rent, profits, capital consumption, net indirect taxes [that is, indirect taxes minus government subsidies].

In this way, the gross national product can be calculated by summarizing the above-mentioned items of each department [material production department and non-material production department] in the country.

2. The quality of life of people in the three cities - CPI
Xiao Li, Xiao Zhao, and Xiao Zhang were very good friends when they were in college. After graduating from college, they separated because of work and lived and worked hard in different cities.

In a blink of an eye, it was time for the annual vacation again. The three of them, who hadn't seen each other for several years, decided to have a good dinner together in order to relive the good friendship they had in college.

The dinner was very harmonious.In the meantime, the three of them, each with their own careers and families, seem to have returned to their school days when they talked about everything.When they got together this time, the topics they talked about were nothing more than work, family, and the troubles and complaints of living in different cities.

Xiao Li spoke first.He is now a company employee in a first-tier city, and his monthly salary is quite a lot, but he just feels that the money on hand is very tight and is not enough. He complains that the consumption level in the city is very high, and he often spends a lot of money when he goes shopping. , and their own income level is not directly proportional to the consumption level.

Xiao Zhao also felt the same when he heard this. Instead of going to live in a big city, he stayed in a third-tier city. The income level in this place is far lower than that of a big city. Although the price is lower than that in a big city, it still has to account for income. For the most part, he smiled approvingly to express his agreement with Xiao Li.

For this problem, Xiao Zhang doesn’t think so. He thinks his quality of life is very high now. He lives in a second-tier city. Although the city’s development level is not as good as that of a big city, it is much better than a third-tier city, so his The salary level is higher than that of Xiao Zhao.Moreover, the city where the city is located is not very developed, and there is not so much competition for employment, so the price of the city is at a lower-middle level.He feels that he can buy the goods he needs without spending a lot of money, so he is very satisfied with his current quality of life.

Why do people with the same ability to work but with little difference in wages bring different degrees of happiness to people?I believe that everyone has read the above short story and can find some information conveyed to you.

To understand the meaning of the above story, you first need to understand an economics term - CPI.So what is "CPI"?

CPI, or "Consumer Price Index", is an indicator of price changes that reflects the prices of goods and services related to residents' lives, and is usually used as an important indicator for observing inflation levels.Generally speaking, when the CPI>; 3% increase, we call it inflation; and when the CPI>; 5% increase, we call it serious inflation.

The CPI is a measure of a fixed price of consumer goods, mainly reflecting changes in the price of goods and services paid by consumers. It is also a tool for measuring the level of inflation, expressed in the form of percentage changes.

The main commodities that make up this index in the United States are divided into eight categories, including: food, wine and beverages, housing, clothing, education and communications, transportation, medicine and health, entertainment, and other goods and services.Now that we have figured out the meaning of this term, let's take a closer look at why the quality of life of the three students living in different cities is not the same.

First of all, the city where Xiaoli lives is a relatively developed big city. The income level of the residents in the city is relatively high. There are many, because there are more commodities, the supply of products exceeds the demand, and there are signs of "inflation" to a certain extent, so the currency on hand of residents is not very valuable. The value of commodities that can be bought with 100 yuan It may only be worth more than [-] yuan. The residents earn a lot of money, but the money used to pay for goods is relatively large, so it affects the quality of life of the residents.

Although Xiao Zhang's city is not as developed as a big city, its economic situation is much better than that of a third-tier city, so the consumption level of residents will not be low, which is directly proportional to the city's level of development. The pressure of competition is extremely high, so the probability of "inflation" is much smaller than that of big cities. Residents can buy goods for less than the original value of the currency, and can use more money to buy more items. There is no need to pay more extra bills for goods, so to a certain extent, the happiness of residents is much higher than in other cities.

The core CPI refers to the consumer price index after removing the prices of products that are greatly affected by climate and seasonal factors.

At present, my country has not clearly defined the core CPI, and the United States uses the consumer price index after excluding fuel and food prices as the core CPI.This method was first proposed by the American economist Gordon in 1975. The background was that the United States was affected by the first oil crisis from 1974 to 1975 and there was a relatively large inflation rate. The rise was mainly driven by increases in food and energy prices.

At that time, many economists believed that the increase in food and energy prices in the United States was mainly affected by supply factors and less affected by demand. Therefore, they proposed to deduct changes in food and energy prices from the CPI to measure prices. method of level change.

Beginning in 1978, the U.S. Bureau of Labor Statistics began reporting the rate of inflation after excluding food and energy prices from the Consumer Price Index and the Producer Price Index (PPI).However, even in the economic circles of the United States, there is still a great debate on whether food and energy prices should be deducted from the CPI to judge the price level, and there are many opponents.

Misunderstanding of CPI. Usually, people are more concerned about the rate of change of the economic data of CPI, that is, a percentage. This makes people who do not know economics very well mistakenly think that CPI is a rate of change.

But in fact, under normal circumstances, CPI is an integer greater than 100, that is, a relative price of a series of reference commodity prices relative to their prices in the base period, rather than a rate of change value.Their calculation method is very similar to the price index of the stock market.

Cost performance index is a noun in the field of cost management in project management, and it is a measure of project cost efficiency.

It is calculated as the ratio of realized value [EV] to actual cost [AC].That is: CPI = EV/AC.When the CPI is greater than or equal to 1, it indicates that the situation is favorable, and when the CPI is less than 1, it indicates that the situation is unfavorable.

3. Where is the gap between the poor and the rich -- the Gini coefficient
There is a popular saying on the Internet: the poor are consumers, and the rich are investors; the poor are responsible for discovery, and the rich are responsible for development.

(End of this chapter)