Studied by 4 people
National income accounting
Measures inflows of income + expenditures for economy as a whole
Gross domestic product (GDP)
Defines aggregate output as the dollar value of all final goods and services produced within the borders of a given country during a given period of time, typically a year
Intermediate goods
Goods and services that are purchased for resale or for further processing or manufacturing
Final goods
Consumption goods, capital goods, and services that are purchased by their final users, rather than for resale or for further processing or manufacturing
Multiple counting
Including both intermediate + final goods; distorts GDP value
Value added
Market value of a firm’s output less the value of the inputs the firm has bought from others
Expenditures approach
Viewing GDP as sum of all money spent in buying it
Personal consumption expenditues
Covers all expenditures by households on durable consumer goods (automobiles, refrigerators, video recorders), nondurable consumer goods (bread, milk, vitamins, pencils, toothpaste), and consumer expenditures for services (of lawyers, doctors, mechanics, barbers)
Gross private domestic investment
Purchases of capital + construction, changes in inventories
Net private domestic investment
Only investment in form of added capital
National income accounting
Measures inflows of income + expenditures for economy as a whole
Gross domestic product (GDP)
Defines aggregate output as the dollar value of all final goods and services produced within the borders of a given country during a given period of time, typically a year
Intermediate goods
Goods and services that are purchased for resale or for further processing or manufacturing
Final goods
Consumption goods, capital goods, and services that are purchased by their final users, rather than for resale or for further processing or manufacturing
Multiple counting
Including both intermediate + final goods; distorts GDP value
Value added
Market value of a firms output less the value of the inputs the firm has bought from others
Expenditures approach
Viewing GDP as sum of all money spent in buying it
Personal consumption expenditures
Covers all expenditures by households on durable consumer goods (automobiles, refrigerators, video recorders), nondurable consumer goods (bread, milk, vitamins, pencils, toothpaste), and consumer expenditures for services (of lawyers, doctors, mechanics, barbers)
Gross private domestic investment
Purchases of capital + construction, changes in inventories
Net private domestic investment
Only investment in form of added capital
Net investment = gross investment
depreciation
Government purchases
(1) expenditures for goods and services that government consumes in providing public services and (2) expenditures for publicly owned capital such as schools and highways, which have long lifetimes
Income approach
Viewing GDP in terms of income derived from producing it
Taxes on production and imports
General sales taxes, excise taxes, business property taxes, license fees, and customs duties
National income
Total of all sources of private income (employee compensation, rents, interest, proprietors income, and corporate profits) plus government revenue from taxes on production and imports
Consumption of fixed capital
Huge depreciation charge made against private and publicly owned capital each year
Personal income
All income received, whether earned or unearned
Disposable income
Personal income less personal taxes
Nominal GDP
GDP based on the prices that prevailed when the output was produced is called unadjusted GDP
Real GDP
GDP that has been deflated or inflated to reflect changes in the price level is called adjusted GDP
Price index
Measure of the price of a specified collection of goods and services, called a "market basket," in a given year as compared to the price of an identical (or highly similar) collection of goods and services in a reference year
Government purchases
(1) expenditures for goods and services that government consumes in providing public services and (2) expenditures for publicly owned capital such as schools and highways, which have long lifetimes
Net exports
Exports - imports
Income approach
Viewing GDP in terms of income derived from producing it
Taxes on production and imports
General sales taxes, excise taxes, business property taxes, license fees, and customs duties
National income
Total of all sources of private income (employee compensation, rents, interest, proprietors’ income, and corporate profits) plus government revenue from taxes on production and imports
Consumption of fixed capital
Huge depreciation charge made against private and publicly owned capital each year
Net domestic product
GDP - consumption of fixed capital (depreciation)
Personal income
All income received, whether earned or unearned
Disposable income
Personal income less personal taxes
Nominal GDP
GDP based on the prices that prevailed when the output was produced is called unadjusted GDP
Real GDP
GDP that has been deflated or inflated to reflect changes in the price level is called adjusted GDP
Price index
Measure of the price of a specified collection of goods and services, called a “market basket,” in a given year as compared to the price of an identical (or highly similar) collection of goods and services in a reference year
Note 
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