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)
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