Gross Domestic Product

Lecture Notes on Measuring the Economy By Melcah T. Pascua matter Income Accounting The primary measure of the economys performance is its annual entire railroad siding of goods and services or, as it is called, its aggregate output. Aggregate output is labeled Gross Domestic harvest-feast (GDP) the total market value of all final goods and services produced in a given stratum. Three approaches of computing GDP. 1. The Expenditure Approach (Output Approach) Personal Consumption Expenditure (C) xxxxx Gross Private Domestic Investment (Ig). . xxxxx political relation Spending (G). xxxxx Net Exports (Xn). .. . xxxxx Gross Domestic Product xxxxxxx (C + Ig + G + Xn) 2. The Income Approach (Allocation or moolah Approach) Compensation of Employees. . xxxxx Rents. .. xxxxx Interest.. xxxxx Proprietors Income.. xxxxx incorporated mesh. xxxxx Corporate Income Taxes . xxxxx Dividends.. xxxxx Undistributed Corporate Profits. xxxx National Income.. xxxxx Indirect Business Taxes. .. xxxxx Consumption of Fixed Capital. xxxxx Net Foreign Factor Income clear in home country. . xxxxx Gross Domestic Product . xxxxx 3. The Industry-Origin Approach (Value-Added Approach) Agriculture, hunting, forestry, and fishing. .. xxxx Agriculture and forestry. . xxxx fishing.. xxxx Industry. . .. xxxx Mining and quarrying. xxx Manufacturing. . xxxx Construction. . xxxx Electricity, gas, and water. .. xxxx Service sector.. . xxxx Transport, storage. . xxxx pot and repair of motor vehicles, motorcycles, personal andhousehold goods and communication.. xxxx Financial intermediation Real estate, renting and tune activities. xxxx Public administrationand defense compulsory social security.. xxxx Other services . xxxxGross Domestic Product . . Xxxx Other National Accounts Net Domestic Product (NDP) NDP = GDP Consumption of fixed capital (depreciation) National Income (NI) NI = NDP Net foreign factor income Indirect Business Taxes Personal Income (PI) PI = NI Corporate Income Tax es Undistributed Corporate Profits Social Security contributions + Transfer Payments Disposable Income (DI) = C+S DI = PI Personal Taxes Where C = Consumption S = Savings Nominal GDP vs. Real GDP suppositious Data of an Economy Year Units of Price per Price Unadjusted / Adjusted / Output unit of business leader Nominal GDP Real GDP output 1 5 10 2 7 20 3 8 25 4 10 30 5 11 28 Price of the current year Price Index = X 100 Price of the base year Nominal GDP =Price X Quantity Nominal GDP Real GDP = X 100 Price Index