Chapter 5: National and International Accounts: Income, Wealth, and the Balance of Payments Flashcards
National Income and Product Accounts
Where a closed economy measures and records economic activity
Balance of Payments Accounts
Where an open economy measures and records economic activity
Gross National Expenditure (GNE)
Total expenditure on final goods and services by home entities in any given period of measurement, made up of three parts: personal consumption (C), investment (I), and government spending (G).
GNE = C + I + G
GNE is an expenditure measure
Gross Domestic Product (GDP)
The value of all (intermediate and final) goods and services produced as output by firms, minus the value of all goods and services purchased as inputs by firms.
GDP = C + I + G + TB
In a closed economy, GDP = GNE because TB = 0
Gross National Income (GNI)
Total income resources of the economy
Trade Balance (TB)
The difference between payments made for imports and payments received for exports.
Net Factor Income from Abroad (NFIA)
Value of factor service exports minus factor service imports
Net Unilateral Transfers (NUT)
The value of unilateral transfers the country receives from the rest of the world minus those it gives to the rest of the world
Gross National Disposable Income (GNDI)
Total income resources available to the home country
Current Account (CA)
Tally of all international transactions in goods, services, and income
Financial Account (FA)
Value of asset exports minus asset imports
Capital Account (KA)
Value of capital transfers from the rest of the world minus those to the rest of the world
National Income Identity
Y = C + I + G + CA
Tells us that the current account represents the difference between national income Y and GNE
Current Account Identity
S =Y - C - G = I + CA
Government (Public) Saving
Difference between tax revenue T received by the government and government purchases G