National IncomeAccounting

Karl S. Olimpo

National Income Accounting

• Is the process of counting the value of the flow between sectors and then summoning them to find the total value of the economic activity in the company.

• Measures the output of an entire economy as well as the flow of the sectors.

• It summarizes the level of production in an economy over a specific period of time.

Gross Domestic Product• It is the market value of all the final goods and

services produce in a year within a country’s boarders– Market Value– Final Goods and Services– Produced in a year

GDP as Output

Business Firms$ 11, 102 ( 75%)

Government$ 1, 802 ( 12%)

Households$ 1, 840 ( 12%)The GDP is the measure

of the market value of nation’s total output in a year.

4 Sector of Economy

1.Household2.Business3.Government4.International Sector

GDP as ExpendituresGDP in terms of what each sectors pays for the goods and services that it purchases

• Consumption: The expenses of it’s household

• Investment: It is spending on capital Goods that will be used to produce

other goods and services

2 Components of Total Spending1. Government Spending

2. Net Exports

Consumption $ 103. 65 (70%)

Expenses$ 19.2 (13%)

Government$30.22 (21%)

Net Export-5.45 (-4%)

GDP as an IncomeIncome gained by FactorProduction is classified by:1. Wages2. Interest3. Rent 4. Profit

Wages$ 8,401 (55%)

Rent 304 (2%)

Indirect Business Taxes $1,061 (7%)

Indirect Interest 905 (6%)

Capital Consumption Allowance $ 1,872 (13%)

Corporate Profits $ 1, 258 (9%)

Net Factor Income from Abroad$133 (1%)

Proprietor's Income $1, 060 (7%)

Other Measure of Output and Income

1. Gross National Product2. Net National Product3. National Income4. Personal Income5. Disposable Personal Income

Real and Nominal Measures

1. Nominal GDP- measures output in terms of its current dollar value

2. Real GDP- It is adjusted for changing price levels

Price Index- it is the measure of the average level of prices in an economy; it shows how prices, on average, have changed.

1. Base Year2. Types of Price Indexes

A. GDP Price IndexB. Consumer Price Index (CPI)C.Producer Price Index (PPI)