National Accounts and GDP (module 14)

national accounts

keep track of spending of consumers, sales of producers, business investment spending, government purchases, and other flows of money between different sectors of the economy

consumer spending

household spending on goods and services

government purchases of goods and services

total expenditures on goods and services by federal, state, and local governments

investment spending

spending on productive physical capital and on changes to inventory

exports

goods and services sold to other countries

imports

goods and services bought from other countries

GDP (gross domestic product)

C+I+G+X-IM= the market value of goods and services the economy produces

final good or service

a good or service sold to the end user

intermediate good or service

a good or service sold to a firm that is not the final user

GDP

the total value of all goods and services produced within a country during a given year

value added method (of calculating GDP)

counting only the difference between the value of sales and intermediate goods and services it purchases from other businesses

aggregate spending method (of calculating GDP)

the sum of consumer spending, investment spending, government purchases, and exports minus imports

total factor income method (of calculating GDP)

add up all income (wages earned by labor, interest paid on savings, rent earned by those who lease their assets, dividends paid to shareholders)

included in GDP

domestically produced final goods and services, including capital goods and services, new construction of structures, and changes to inventories

not included in GDP

intermediate goods and services, inputs, used goods, financial assets (stocks and bonds), imports