National Income Accounting
The total market value of all final goods and services produced in the economy during the year.
A measurement system used to estimate national income and its components.
Gross Domestic Product (GDP)
A measurement system used to estimate national income and its components.
The total market value of all final goods and services produced in the economy during the year.
Financial markets
We trade and invest with the rest of the world – We buy products made in other countries – We sell our products to other countries – We borrow from other countries – We lend money to other countries
Collect taxes – Use the taxes to purchase goods and services for its operation – Give transfer payments.
Possibility of savings and borrowing – Households saves – Firms borrow households’ savings to buy capital goods (property, equipment) – The money can be lent internationally – The government can borrow this money.
Foreigners
Possibility of savings and borrowing – Households saves – Firms borrow households’ savings to buy capital goods (property, equipment) – The money can be lent internationally – The government can borrow this money.
We trade and invest with the rest of the world – We buy products made in other countries – We sell our products to other countries – We borrow from other countries – We lend money to other countries.
Collect taxes – Use the taxes to purchase goods and services for its operation – Give transfer payments.
Government
Collect taxes – Use the taxes to purchase goods and services for its operation – Give transfer payments.
Possibility of savings and borrowing – Households saves – Firms borrow households’ savings to buy capital goods (property, equipment) – The money can be lent internationally – The government can borrow this money.
We trade and invest with the rest of the world – We buy products made in other countries – We sell our products to other countries – We borrow from other countries – We lend money to other countries.
Product Markets –
Goods and services that are at their final stage of production and will not be transformed into yet other goods or services.
Transactions in which business buy resources.
Transactions in which households buy goods.
The yearly amount earned by the country’s factors of production.
Final Goods and Services
Transactions in which business buy resources.
Transactions in which households buy goods.
Goods and services that are at their final stage of production and will not be transformed into yet other goods or services.
The yearly amount earned by the country’s factors of production.
Factor Markets
Transactions in which households buy goods.
Transactions in which business buy resources.
Goods and services that are at their final stage of production and will not be transformed into yet other goods or services.
The yearly amount earned by the country’s factors of production.
Total Income
Transactions in which business buy resources.
Goods and services that are at their final stage of production and will not be transformed into yet other goods or services.
The yearly amount earned by the country’s factors of production.
Transactions in which households buy goods.
Intermediate Goods
Goods used up entirely in the production of final goods. – Not included in the calculation of GDP.
The dollar value of an industry’s sales minus the value of intermediate goods used in production.
Value Added
Goods used up entirely in the production of final goods. – Not included in the calculation of GDP.
The dollar value of an industry’s sales minus the value of intermediate goods used in production.
Expenditure Approach
A way of computing national income by adding up the dollar value at current market prices of all final goods and services.
has 4 categories: 1) Consumption Expenditures (C) 2) Gross Private Domestic Investment (I) 3) Government Expenditures (G) 4) Net Exports (X-M)
The Expenditure Approach
A way of computing national income by adding up the dollar value at current market prices of all final goods and services.
has 4 categories: 1) Consumption Expenditures (C) 2) Gross Private Domestic Investment (I) 3) Government Expenditures (G) 4) Net Exports (X-M)
Consumption expenditures
Creation of capital goods which increases production in the futures • Producer durable (capital good): produced in order to make other goods with it. • Inventory investment: increasing the inventory of a finished product • Consumer expenditure on new residential structure.
ς� We purchase foreign goods (imports, M) Foreigners purchase goods from us (exports, X) Net exports = (X – M) = total exports – total imports.
It is how a household spends its money • Durable consumer goods • Non-durable consumer goods • Services
ς� Government purchase of goods and services Buying goods and services by the government Wages and salaries to government employees Many of the goods and services produced by the government are not sold in the market (i.e. A newly built road) so we cannot use their market value when calculating GDP. We have to look at how much it cost to make and include it in the year it was built.
Gross private domestic investment
ς� Government purchase of goods and services Buying goods and services by the government Wages and salaries to government employees Many of the goods and services produced by the government are not sold in the market (i.e. A newly built road) so we cannot use their market value when calculating GDP. We have to look at how much it cost to make and include it in the year it was built.
Creation of capital goods which increases production in the futures • Producer durable (capital good): produced in order to make other goods with it. • Inventory investment: increasing the inventory of a finished product • Consumer expenditure on new residential structure.
It is how a household spends its money • Durable consumer goods • Non-durable consumer goods • Services.
ς� We purchase foreign goods (imports, M) Foreigners purchase goods from us (exports, X) Net exports = (X – M) = total exports – total imports.
Government expenditures
ς� We purchase foreign goods (imports, M) Foreigners purchase goods from us (exports, X) Net exports = (X – M) = total exports – total imports
ς� Government purchase of goods and services Buying goods and services by the government Wages and salaries to government employees Many of the goods and services produced by the government are not sold in the market (i.e. A newly built road) so we cannot use their market value when calculating GDP. We have to look at how much it cost to make and include it in the year it was built.
It is how a household spends its money • Durable consumer goods • Non-durable consumer goods • Services.
Creation of capital goods which increases production in the futures • Producer durable (capital good): produced in order to make other goods with it. • Inventory investment: increasing the inventory of a finished product • Consumer expenditure on new residential structure.
Net exports
It is how a household spends its money • Durable consumer goods • Non-durable consumer goods • Services.
Creation of capital goods which increases production in the futures • Producer durable (capital good): produced in order to make other goods with it. • Inventory investment: increasing the inventory of a finished product • Consumer expenditure on new residential structure.
ς� We purchase foreign goods (imports, M) Foreigners purchase goods from us (exports, X) Net exports = (X – M) = total exports – total imports.
ς� Government purchase of goods and services Buying goods and services by the government Wages and salaries to government employees Many of the goods and services produced by the government are not sold in the market (i.e. A newly built road) so we cannot use their market value when calculating GDP. We have to look at how much it cost to make and include it in the year it was built.
Net National Income (NNI)
The amount of income that households actually receive before they pay personal income taxes.
The income earned by the factors of production. – NNI = NDP – INDIRECT BUSINESS TAXES LESS SUBSIDIES.
Personal Income (PI)
The amount of income that households actually receive before they pay personal income taxes.
The income earned by the factors of production. – NNI = NDP – INDIRECT BUSINESS TAXES LESS SUBSIDIES.
Disposable Personal Income (DPI)
Personal income after personal income taxes have been paid.
The amount that is left over from disposable income after consumption.
Personal Savings (S)
The amount that is left over from disposable income after consumption.
Personal income after personal income taxes have been paid.
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