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National income Accounting
Transcript of National income Accounting
I. Financial Transactions
a. Buying and Selling Securities
b. Government Transfer
c. Private Transfer Payments
II. Transfer of Second-hand Payments Approaches in Measuring GDP 1.Expendiure Approach
2. Income Approach
3. Industrial Origin Approach The economy is divided
into three sectors: 1. Agriculture, Fishery,
and forest sectors
2. Industry sector
3. Service Sector GDP SHORT COMINGS * Non-market Transactions
* Distribution, Kind, and Quality of Products
* Neglect of Leisure Time
* The Underground Economy
* Economic Bads GROSS DOMESTIC PRODUCT
GROSS NATIONAL PRODUCT Three imporatant points that we need to understand when we talk about GDP:
1. that it is measured in market or money value
2. it only counts new domestic production
3. that it only includes final goods and services (C) = Personal Consumption Expenditures
(I) = Gross Private Domestic Investment
(G) = Government Consumption Expenditure and Gross Investment
(X-M) = Net Exports GDP=C+I+G+(X-M) EXPENDITURE APPROACH The Income Approach GDP = Compensation of employees + rents +
profits + Net interest + Indirect Taxes +
depreciation The Industrial Origin or
Gross Value Added Approach NOMINAL OR CURRENT GDP VERSUS REAL GDP * Convert nominal GDP to Real GDP Real GDP= Nominal GDP GDP defactor x 100 Gross Domestic Product the Industrial Origin Approach "We are the Group 2"