National Income Accounting

1. National-Income
Accounting
Prepared by:
Akash gupta 188
Dewang chauhan 203
alankar das 190
Pankaj chhokar 147
shikha rai 161
1

2. Measuring the Economy
2

3. Measures of Output
3

4. Gross Domestic Product (GDP)
4

5. GDP Versus GNP
5

6. GDP per Capita
6

7. Measurement Problems
7

8. Value Added
8

9. Value Added
9

10. Value Added in Various Stages
of Production
10
Stages of Production
Value of
Transactions
Value
Added
1. Farmer grows wheat, sells it to miller $0.12 $0.12
2. Miller converts wheat to flour, sells it to baker 0.28 0.16
3. Baker bakes bagel, sells it to bagel store 0.60 0.32
4. Bagel store sells bagel to consumer 0.75 0.15
Total $1.75 $0.75

11. Two Ways to Calculate GDP
11

12. Real Versus Nominal GDP
12

13. Computing Real GDP
13

14. Computing Real GDP
14
nominal GDP in year
Real GDP in year
price index
t
t =
100
price index
100
percentage change+
=

15. Net Domestic Product
15

16. Net Domestic Product
16
–NDP GDP depreciation=

17. Net Domestic Product
17

18. Net Domestic Product
18

19. Net Domestic Product
19

20. The Uses of Output
20

21. Consumption
21

22. Investment
22

23. Government Spending
23

24. Net Exports
24

25. GDP Components
25
( )–GDP C I G X M= + + +

26. Measures of Income
26

27. Output = Income
27
Wages
Product
market
Consumer spending
Investment spending
Government spending
Net exports
Profits
Interest
Rent

28. The Equivalence of Expenditure and
Income
(In billions of dollars)
28
Expenditure Income
C:Consumer goods and
services
Wages and salaries $8,062
$10,057 Corporate profits 1,092
I:Investment in plant,
equipment, and
inventory
Proprietors’ income 1,072
Rents 64
1,994 Interest 929
G:Government goods
and services
Taxes on output and imports 1,034
2,882 Depreciation 1,832
X:Exports 1,859 Miscellaneous 46
M:Imports (2,529) Statistical discrepancy 136
GDP:Total value of output $14,265 = Total value of income $14,265

29. National Income
29
–NDP GDP depreciation=

30. Net Foreign Factor Income
30

31. National Income
31
NI NDP net foreign factor income= +

32. Personal Income
32
PI NI indirect business taxes corporate profits
interest and misc payments
Social Security taxes
transfer payments capital income
= − −
−
−
+ +

33. Indirect Business Taxes
33

34. Corporate Profits
34

35. Payroll Taxes and Transfers
35

36. Capital Income
36

37. Disposable Income
37
–DI personal income personal taxes=

38. Disposable Income
38
DI consumption saving= +

39. The Flow of Income
39

40. Income and Expenditure
40

41. 41