Gross Domestic Product
Lecture Notes on Measuring the Economy
By: Melcah T. Pascua
National Income Accounting
The primary measure of the economy’s performance is its annual total output of goods and services or, as it is called, its aggregate output. Aggregate output is labeled Gross Domestic Product (GDP): the total market value of all final goods and services produced in a given year.
Three approaches of computing GDP.
1. The Expenditure Approach (Output Approach)
Personal Consumption Expenditure (C)……………… xxxxx
Gross Private Domestic 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
Proprietor’s Income…………………………..………………… xxxxx
Corporate Profits………………………………………………. xxxxx Corporate Income Taxes…………… . xxxxx Dividends………………………………….. xxxxx Undistributed Corporate Profits…. xxxxx
National Income………………………………………………….. xxxxx
Indirect Business Taxes……………………….……………….. xxxxx
Consumption of Fixed Capital………………………………. xxxxx
Net Foreign Factor Income Earned 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…………………………………. xxxx
Manufacturing……………………….……………………. xxxx
Construction…………………………….…………………. xxxx
Electricity, gas, and water………………….……….. xxxx
Service sector……………………………………..………………. xxxx
Transport, storage …………………….………………. xxxx
Trade and repair of motor vehicles, motorcycles, personal and household goods
By: Melcah T. Pascua
National Income Accounting
The primary measure of the economy’s performance is its annual total output of goods and services or, as it is called, its aggregate output. Aggregate output is labeled Gross Domestic Product (GDP): the total market value of all final goods and services produced in a given year.
Three approaches of computing GDP.
1. The Expenditure Approach (Output Approach)
Personal Consumption Expenditure (C)……………… xxxxx
Gross Private Domestic 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
Proprietor’s Income…………………………..………………… xxxxx
Corporate Profits………………………………………………. xxxxx Corporate Income Taxes…………… . xxxxx Dividends………………………………….. xxxxx Undistributed Corporate Profits…. xxxxx
National Income………………………………………………….. xxxxx
Indirect Business Taxes……………………….……………….. xxxxx
Consumption of Fixed Capital………………………………. xxxxx
Net Foreign Factor Income Earned 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…………………………………. xxxx
Manufacturing……………………….……………………. xxxx
Construction…………………………….…………………. xxxx
Electricity, gas, and water………………….……….. xxxx
Service sector……………………………………..………………. xxxx
Transport, storage …………………….………………. xxxx
Trade and repair of motor vehicles, motorcycles, personal and household goods