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National and International Accounts (The Balance of Payments ((net) lender…
National and International Accounts
Measuring Macroeconomic Activity**
-It can be measured and recorded in the
national income and product account.
-Any additional flows are recorded in a nation's
balance of payments accounts
Gross national expenditure (GNE)
The total expenditure on a final goods and services by home entities in any given period.
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.
Gross National Income (GNI)
Income paid to domestic entities. the total income resources of the economy.
Income, Product, and Expenditure
Expenditure Approach
It examines how much is spent on demand for final goods and services. The key measure is GNE.
Product Approach
It measures the value of all goods and services produced as output minus the value of goods used as inputs in production
Income Approach
The key measures are gross national income GNI and gross national disposable income GNDI
The Balance of Payments
Accounting for Home and Foreign Assets
From the home perspective, a foreign asset is a claim on a foreign country. When a home entity holds such an asset, it is called an
external asset
of the home country.
A foreign entity holds such an asset, it is called an
external liability
of the home country because it represents an obligation owed by the home country to the rest of the world
(net) lender
When country that has a current account surplus
(net) borrower
When country that has a current account deficit
External Wealth
Net creditor
When external assets exceed external liabilities
Net debtor
When external liabilities exceed external assets