National Income Accounting - GDP Flashcards
What is the Product Approach for GDP?
A measure of the total value of final goods and
services newly produced in a country over a
period of time (usually one year).
Calculated by multiplying the volume by prices for all final products
What is the expenditure approach for calculating GPD?
Total value of the expenditures of final goods and services made by consumers, companies, the government adn the foreign sector.
Y = C + I + G + X - M
where Y stands for GDP(output), C- private consumption, I - investment, G - government spending, X - exports, M - Imports
What is the income approach for calculating GDP?
GDP is defined as the total national income generated in a country. It can be divided between two big catergories: income of labour and income of capital.
What does Labour Income include?
wages,
salaries,
incomes of self-employed
What does Capital Income include?
Interest and Profits
rents(income for the land-owner)
Royalties
What is GDP per Capita?
GDP per capita is the most commonly used measure for living standard of one country
How do you calculate GPD per capita?
GDP per capita = GDP / Population
Why is it important to calcualte GDP per capita?
It is a measure of the living standard in a country
What is Real GDP?
An indicator of the total output that reflects the actual value of goods and services produced, by removing the effect of changes in prices.
What must we take into account when calculating Real GDP?
we take into account the price level of a certain year to get the real GDP for all years we want to analyze called the “base year”
What is Real GDP growth?
it is an indicator of the growth of output of a certain economy
Real GDP growth Formula
[(Yrt - Yrt-1) / Yrt-1] * 100
where Yrt stands for the real GDP in a certain year
t stands for a certain year
t-1 is the year before that
Yrt-1 is the real GDP for the previous year
