total production, income, and expenditure: the national accounts
total production = income = expenditure
GPD
approaches
defined as the total value of all final goods and services produced with in geographic boundaries
production method
income method
expenditure method
only added value
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final consumption expenditure.
gross capital formation
final consumption expenditure by house holds
final consumption expenditure by general government
fixed capital formation
changes in inventory
valuation at......
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subsidies
factor costs: the amount recevend by the various factors of production
indirect taxes: taxes on production
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basic prices
factor costs
market prices
Basic price +takes on products - subsidies on production
market prices - taxes on products + subsidies products
basic prices - other taxes on production + other subsidies on production
factor cost + all taxes on products and production - all subsidies
factor prices + other taxes on production - other subsidies on production
basic prices - other taxes on production + other subsidies on production
GDP at...
GDP at factor costs
gdp at basic prices
+other taxes on production - other subsidies on production = GDP at basic prices
+taxes on products - subsidies on products = GDP at market prices
valuation at current vs constant prices
the ratio between nominal GDP and real GDP is called the GDP deflator
Problems with GDP
unrecorded activity
GDP as a measure of welfare
non-market production
distribution of income
GNI
net primary income=primary income to the rest of the world - primary income from the rest of the world
GNI= GDP+primary income from the rest of the world- primary income to the rest of the world
GDE
GDE=C+I+G
GDP=C+I+G+X-Z
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saving
gross saving consists of saving by house holds, corporate saving, saving of general government and consumption of fixed capital
net saving = gross saving - consumption of fixed capital
=income - expenditure