This document discusses national income accounting and how gross domestic product (GDP) is measured. GDP is the total market value of all final goods and services produced within a country in one year. To calculate GDP, the quantity of each good and service is multiplied by its price to convert everything into a common value measure that can be added together. GDP excludes intermediate goods and services to avoid double counting. It represents a flow over a year, not a stock at a single point in time.
The Organisation for Economic Co-operation and Development has defined gross domestic product as “an aggregate measure of production equal to the sum of the gross values added of all resident institutional units engaged in production (plus any taxes, and minus any subsidies, on products not included in the value of their outputs).”
The Organisation for Economic Co-operation and Development has defined gross domestic product as “an aggregate measure of production equal to the sum of the gross values added of all resident institutional units engaged in production (plus any taxes, and minus any subsidies, on products not included in the value of their outputs).”
Key concepts
• Measuring economic activity – GDP and GNP/GNI
• Output, income and expenditure methods of GDP accounting
• From GDP to GNP
• Nominal and real GDP
• Nominal and real GNP/GNI
• Per capita income
• Use of national income figures
• Green GDP
Key concepts
• Measuring economic activity – GDP and GNP/GNI
• Output, income and expenditure methods of GDP accounting
• From GDP to GNP
• Nominal and real GDP
• Nominal and real GNP/GNI
• Per capita income
• Use of national income figures
• Green GDP
BUSI 223Exercise 6 Instructions1. How much life insurance do y.docxRAHUL126667
BUSI 223
Exercise 6 Instructions
1. How much life insurance do you need? Using the Life Insurance Calculator, enter the information and post your results in the textbox section of the assignment link. You do NOT need to get actual quotes, just see how much you need.
2. Decide which health care plan you would choose. Looking at eHealth Insurance, enter your information (or you can make up information), and then pick 3 companies to compare. Again, you do not need to input personal information. You must only fill in the gender, birth date, tobacco use, college student, and zip code information. Copy and paste the results of the 3 companies that you compared into a Microsoft Word document and attach it in the Module/Week 6 assignment link. Choose the 1 plan that you would suggest and explain why you chose that particular plan.
Submit this assignment by 11:59 p.m. (ET) on Monday of Module/Week 6.
Lecture 2
Chapter 7
Measuring Domestic Output and National Income
Assessing the Economy’s Performance
National income accounting measures economy’s overall performance
Bureau of Economic Analysis compiles National Income and Product Accounts
Assess health of economy
Track long-run course
Formulate policy
National income accounting does for the economy what private accounting would do for an individual household or business. The Bureau of Economic Analysis, an agency of the Department of Commerce, compiles the data and reports it in National Income and Product Accounts. This information is used by economists and policymakers in formulating decisions for the best interest of the nation.
Gross Domestic Product(GDP)
GDP is the dollar value of all final goods and services produced within the borders of a country during a specific period of time.
Measure of aggregate output
Monetary measure
Avoid multiple counting
One way to avoid multiple counting is to include market value of final goods and ignore intermediate goods
Another approach is to count value added
The primary measure of the economy’s performance as a whole is its aggregate output. This is most commonly calculated as Gross Domestic Product, or GDP. GDP is a monetary measure in that everything is valued in dollars. All goods and services produced must be converted into dollar values for GDP to work. To avoid multiple counting of goods, GDP includes only the market value of final goods and ignores intermediate goods, which are goods either purchased for resale or for further processing into final goods. GDP could also avoid multiple counting by counting only the value added at each stage. Value added is the market value of a firm’s output less the value of the inputs that the firm purchased from others.
Intermediate goods are products that are purchased for resale or further processing or manufacturing. Final goods are products that are purchased by their end users.e.g Lettuce, carrots and vinegar in restaurant salads are intermediate goods, restaurant salads are final goods.
Monetary Measu ...
Chapter # 2 of macroeconomics by mankiw 9th edition. Measurements of national income in a small and large economy. Different concepts of national income are explained such as gdp, gnp, gni, disposable income, personal disposable income etc. Additionally, concepts such as depreciation and its impact on national income is also explained. The national income identity is elaborated along with 3 different methods to measure national incomes
Gross Domestic ProductErskine S. Walther, Ph.D.G.docxwhittemorelucilla
Gross Domestic Product
Erskine S. Walther, Ph.D.
GDP: Defined
GDP: The market value of all final goods and services produced in an economy in a specific period of time.
Market Value: The measurement is in current prices, this known as Nominal GDP or just GDP.
Final Goods and Services: Goods and services that have reached their final usage. They are not used to produce another good or service. Goods that are used in that way are Intermediate Goods.
Intermediate Goods and Services are those that are used as inputs into the production of other goods and services. There are not directly counted in GDP as their value is included in the value (price) of the final goods and services. Thus, counting them directly would double count the same output. However, if the intermediate good has not been sold, it is counted in GDP as inventory.
GDP Defined: continued
Specific Period of Time: GDP can be computed for a month, a quarter or a year. The most common measures are annually and quarterly.
Formal, Legal Markets: Only goods and services that are traded in formal, legal markets are counted in GDP.
Underground Economy: The underground economy is composed of economic transactions involving activities that are not legal activities in a given society. These are not included in GDP. Illegal drugs and illegal gambling are common examples.
Informal Economy: These are legal activities that do no go through formal markets. They are not included in GDP. Income not reported for taxation purposes or work done for barter are examples of informal economic activities.
Some authors include legal activities as part of the underground economy definition.
GDP Defined: continued
Household Production: Productive activities done in and for the household are not counted in GDP as there is no direct monetary payment for such activities. (If you give children an allowance for household chores that would be part of the informal economy. If you clean your own home, that is household production.)
Leisure Activities: Leisure activities that do not involve the purchase of goods and services are not counted in GDP.
Spending an afternoon with family and friends that does not involve buying goods or services would not be counted in GDP as no economic transaction has occurred.
A vacation involving paid activities does count in GDP as goods and services are purchased.
GDP: Purpose
The Purpose of GDP is to measure the total output of goods and services in any economy during a specific period of time.
GDP is Value Neutral: It makes no judgments regarding product quality or whether or not a good or service is “good” for you. Those judgments are left to the consumer who is assumed to be able to make intelligent decisions that reflect their own personal tastes, preferences and values.
Changes in GDP measure economic growth.
Economic growth is the increase in the output of goods and services in an economy over a specific period of time. This must b ...
This PPT Aims to provide knowledge and Understanding about the concept of GDP, Types of GDP, Importance of GDP, Formula For GDP and other concept Related to GDP.
This slide is too much easy for beginners of economics students and I am trying to represent shortly to understand National Income Accounting. It must be helpful for your better understanding.
Concept of National Income with GDP GNP NNP& NDPAnkit Singh
It is the detailed study of National Income in a macro economics of a country with the methods of its measurement and concepts related to it like Gross Domestic Product, Gross National Product, Net Domestic Product, Net National Product.
Similar to Report in economics chapter 10-national income accounting (20)
Report in economics chapter 10-national income accounting
1. Northern Iloilo Polytechnic State College
Estancia, Iloilo
SCHOOL OF GRADUATE EDUCATION
ECONOMICS IN EDUCATION
1st Semester – 2012-2013
Professor: Dr. Leonisa G. Babas
CHAPTER 10 – National Income Accounting
Reporter: Mrs. Ma. Theresa S. Casorla
Introduction
National income accounting is a set of meaning for measuring economic activity in the
aggregate economy, that is the, entire economy. National income accounting provides a way of
measuring total production broken down into sub-aggregates such as consumption, investment,
and personal income; defines the relationship among these sub-aggregates to analyze how much
the nation is producing and consuming.
Measuring Economic Output
Economists’ initially measure of domestic output: real gross domestic product (real
GDP). Gross Domestic Product (GDP) is the aggregate market value of all final goods and
services in an economy in a one-year period. Economists and other analysts talk about GDP
how much it has increased or decreased.
The economic actions of the citizens and businesses of a country is measured by Gross
National Product (GNP), the total final output of citizens and businesses of an economy in a one
year period. So the economic activity of Filipino citizens working abroad is counted in the
Philippine GNP. To this extent, GDP characterizes the economic output within the physical
boarders of a country while GNP characterizes the economic output produced by the citizens of a
country. To shift from GDP to GNP we must add net foreign factor income to GDP. Net Foreign
Factor Income is the income from foreign domestic factor sources minus foreign factor income
received domestically. We must add the foreign income of our citizens and subtract the income
of residents who are not citizens.
Calculating GDP
For total final output (GDP) consists of thousands of various services and products:
banana, mangoes, assembled computers, haircuts, legal advice, and so on. To reach aggregate
output, we have to add them all into composite measure. You cannot add banana and mangoes
and assembled computers. You can only add like things measured in the same units. To add like
things, we must convert them into like things by multiplying each goods by its price. Economists
describe this as weighing the importance of each good by its price.
Multiplying the amount of each good by its market price changes the conditions in which
we trash out each good from a quantity of particular product to a value measure of that good.
As soon as all goods are definitely stated in that value measure, they can be added
simultaneously.
2. The final goods and services produced in a year, multiplying the quantity produced by the
market price per unit, we have the economy’s outputs stated in units of value. If we add up all
these units of value, we have that year’s Gross Domestic Product.
GDP represents a flow of an amount per year, not a stock of an amount at a particular
moment of time. It pertains to the market value of final output.
GDP is a flow notion. This refers to the amount of total final output a country produces
per year. The per year is always left unstated, but it is important and essential. How much you
earn is a flow concept; it has meaning only when a time period is related with it such as per
week, per month, per year. A stock concept is the amount of something with it. (You weigh 160
pounds; you don’t weigh 160 pounds per week.)
GDP measures ultimate output. GDP does not measure total transactions in an
economy; it measures final output, goods and services bought for final use. At the time one
business company sells products to another business company for use in manufacturing of
another good, the first firm’s products are not taken into account as final output. They are
intermediate products, products used as input in the production of some other product. To count
both intermediate goods and final goods as part of GDP would be to double-count them. An
example of an intermediate good would be wheat sold to a baker. If we counted both the wheat
(intermediate good) and the bread (final good) made from the wheat, the wheat would be double-
counted thereby overestimating final output.
If we did not exclude intermediate goods, a change in organization would seem like
change in output. A firm that produced tire combined with a firm that produced cars. Both then
produce exactly what each did separately before the merger. Final output and intermediate output
has not changed. The only disparity is that the intermediate output of tire is now internal to the
firm. Each firm’s sales of goods to final consumers, not sales to other firms, preclude mere
changes in organization form having an effect on the GDP measure of output.
Eliminating Intermediate Goods. This refers to the two ways to eliminate intermediate
goods from the measure of GDP. One is to add up only final sales. Business companies would
have to set apart goods they sold to consumers from intermediate goods to produced other goods.
Another way to exclude double counting is to be guided by the value added approach.
Value added is the rise in value that a business company helps to bring about a product or
service. It is determined by subtracting intermediate goods, the cost of materials that business
company uses to produce a good or service, from the value of its sales.