Gross Domestic Product

Lecture Notes on Measuring the Economy By Melcah T. Pascua National Income invoice The primary measure of the economys performance is its annual derive output of goods and services or, as it is c bothed, its aggregate output. Aggregate output is tagged Gross house servant Product (gross domestic product) the total market value of all final goods and services produced in a given year. Three approaches of calculation GDP. 1. The Expenditure Approach (Output Approach) Personal Consumption Expenditure (C) xxxxx Gross common soldier domestic help Investment (Ig). . xxxxx Government Spending (G). xxxxx Net Exports (Xn). .. . xxxxx Gross Domestic Product xxxxxxx (C + Ig + G + Xn) 2. The Income Approach (Allocation or Earnings Approach) compensation of Employees. . xxxxx Rents. .. xxxxx Interest.. xxxxx Proprietors Income.. xxxxx Corporate Profits. xxxxx Corporate Income Taxes . xxxxx Dividends.. xxxxx undistributed Corporate Profits. xxxx National Income.. xxxxx Indirect Business Taxes. .. xxxxx Consumption of fix Capital. xxxxx Net Foreign Factor Income Earned in hearthstone country. . xxxxx Gross Domestic Product . xxxxx 3. The Industry-Origin Approach (Value-Added Approach) farming, hunting, forestry, and fishing. .. xxxx Agriculture and forestry. . xxxx Fishing.. xxxx Industry. . .. xxxx Mining and quarrying. xxx Manufacturing. . xxxx Construction. . xxxx Electricity, gas, and weewee. .. xxxx Service sector.. . xxxx Transport, storage. . xxxx Trade and repair of motor vehicles, motorcycles, individualized andhousehold goods and communication.. xxxx Financial intermediation genuinely estate, renting and byplay activities. xxxx Public administrationand defense compulsory social security.. xxxx separate 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 Incom e (PI) PI = NI Corporate Income Taxes Undistributed Corporate Profits Social security contributions + Transfer Payments Disposable Income (DI) = C+S DI = PI Personal Taxes Where C = Consumption S = Savings nominal phrase GDP vs. real number GDP Hypothetical Data of an Economy Year Units of footing per Price unadjusted / Adjusted / Output unit of index 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