Ch.6: Measuring National Output and National Income

National income and product accounts

Data collected and published by the government describing the components of national income and output.

Gross Domestic Product (GDP)

The total market value of all final goods and services produced within a country by factors of production located there in a given period.

Intermediate goods

Goods produced by one firm for use in further processing or for resale by another firm.

Value added

The difference between the value of goods leaving a stage of production and the cost of the goods entering it.

Gross National Product (GNP)

The total market value of all final goods and services produced by factors of production owned by a country's citizens, regardless of location.

Expenditure approach

A method of computing GDP that measures total spending on all final goods and services during a given period.

Personal consumption expenditures (C)

Household spending on consumer goods and services, divided into durable goods, nondurable goods, and services.

Gross private domestic investment

Investment in capital, including new housing, plants, equipment, and inventory by the private sector.

Depreciation

The amount by which an asset's value falls in a given period.

Net investment

Gross investment minus depreciation.

Government consumption and gross investment (G)

Expenditures by federal, state, and local governments for final goods and services.

Net exports

The difference between exports (sales to foreigners) and imports (purchases from abroad).

Income approach

A method of computing GDP that measures the income received by all factors of production in producing final goods and services.

National income

The total income earned by the factors of production owned by a country's citizens.

Net National Product (NNP)

Gross national product minus depreciation.

Disposable personal income

Personal income minus personal income taxes, representing the amount households have to spend or save.

Personal saving rate

The percentage of disposable personal income that is saved rather than spent.

Nominal GDP

Gross domestic product measured in current dollars (prices paid currently).

Base year

The year chosen for the weights used in a fixed-weight procedure.

Informal economy

The part of the economy where transactions take place and income is generated unreported and uncounted in GDP.