National and International Accounts

Measuring Macroeconomic Activity**

Income, Product, and Expenditure

The Balance of Payments

External Wealth

-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.

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

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

Net creditor

When external assets exceed external liabilities

Net debtor

When external liabilities exceed external assets