Economics - National accounts aggregates

National account

an accounting record of the total value of production, income and expenditure in a country … & is used to measure economic activities of a country i.e. GDP

Final goods

goods that are ready for consumption by the participants in the economy

Intermediate goods

goods that are used as inputs to produce other goods and services
Goods: wood to make tables, plastic to make aircons, flour to bake a cake, water to grow plants
Services: transportation, electricity, internet for communication
Can be intermediate and final at the same time

Double-counting

occurs when intermediate products are added to final products and will cause national accounts to reflect an incorrect higher total

Residual item

balancing item due to errors and omissions

Taxes on production

taxes not linked to a specific good or service (e.g. tax on land and buildings, business licensees, payroll taxes)

Taxes on products

taxes payable per unit of some good and service e.g. VAT - paid by consumers

Subsidies on production

subsidies that are not linked to specific goods or services, e.g. subsidy on employment.

Subsidies on production

financial incentives to help struggling industries produce, as well as direct subsidies payable per unit exported to encourage exports (e.g. government subsidy on bread).

Gross domestic expenditure (GDE)

the value of total spending within the borders of a country in a specific period

Gross national income (GNI)

total remuneration for the factors of production

Real GDP (GDP at constant prices)

adjusted for price changes

Nominal GDP (GDP at current prices)

gives the current value of the price, not adjusted for price changes

GDP Deflator

ratio of GDP at current prices to the GDP at constant price for a particular period
Formula for GDP Deflator: Nominal GDP ÷ Real GDP x 100
Reasons for calculating GDP deflator: to eliminate the effect of price changes to get the actual GDP not distorted by inflation

GDP @ basic price

total value of all final goods and services produced within the borders of a country in a specific period

GDP @ market price

total value of all final goods and services sold within the borders of a country in a specific period plus taxes on products minus subsidies on products

GVA (Gross Value Added)

the value of goods and services produced by an industry, sector, manufacturer, area or region in an economy
(same thing as GDP at basic price - sometimes refered to as “GVA at basic price”)