Chap 5 Flashcards
National income accounting
The technique used to measure overall production of the economy and other related variables for the nation as a whole
Gross Domestic Product
The total market value of all the final goods and services produced in a given period of time
Intermediate goods
Products purchased for resale or further processing or manufacturing
Multiple counting
Wrongly including the value of intermediate good in the GDP
Value Added
The value of a product sold by a firm less the value of the product purchased and used by the firm to produce the product
Expenditure approach to GDP
The method to measure GDP that adds up all the expenditures made for all final goods and services
Income approach to GDP
The methode to measure GDP that adds up all the income generated bythe production of final goods and services
Expenditure approach: formula
C+Ig+G+Xn
Personal Consumption Expenditure
The expenditure of household for durable and nondurable customer goods and services
Gross Investment
Include:
- all final purchase of machinery
- all constructions
- changes in inventory
Non-investment transaction
An expenditure for stock, bonds, or second hand capital goods
Net Investment
Includes only investment of added capital
Net investment = Gross investment - depreciation
Capital consumption allowance
Consumption of Fixed Capital
(Depreciation)
Estimate of the amount of capital worn out of used up in producing GDP
Capital Stock
The total available capital in a nation
Government purchases
The expenditure of all governments in the economy for final goods and services
Government transfer payment
The disbursement of money by the government for which government receives no currently produced good or service in return
Net exports
Net exports = Exports - imports
National Income
Total income earned by resource supplier for their contribution
To gross national product
Profit of corporation and government enterprise before taxes
- corporate income taxes
- dividends
- undistributed corporate profit
Corporate income taxes
A tax levied on the net income of corporations
Undistributed corporate profits
After-tax corporate profits not distributed as dividends to shareholders; also called retained earnings
Interest income
Payment of income to those who supply the economy with capital
Disposable income
Personal income less personal taxes
Personal income
The earned and unearned income available to resource suppliers and others before the payment of personal income taxes
