SS - CHAP 11

• Market price is the amount a buyer pays for the product he or she purchases from the market.
• Wonnacott defined national product as the money value of goods and services the economy produced in a period of time.
• There are two basic approaches in measuring the performance of the economy: the national product approach and the national income approach.
• National income is the total of all factor incomes generated from supplying the economy with the factors of production.
• In national income and product accounting, the market value of each product is computed once only. This is to avoid "double counting" errors.
• A final product is a good purchased by the ultimate user or consumer.
• The national product approach is also called the expenditure approach.
• National product takes into account the expenditures incurred by the four. macroeconomic sectors. Those expenditures are personal consumption expenditures (consumers sector), government expenditures on goods and services (public sector), capital formation (business sector), and net exports (foreign sector). They are the components of national product.
• Personal consumption expenditures refer to household consumption. This is the biggest component of the national product of the Philippine economy.
• Expenditures under personal consumption expenditures are classified into three types: durable goods, nondurable goods, and services.
• The Philippine government is the biggest single spender in the economy.
• Capital formation, commonly known as investment, is the aggregate expenditures on fixed capital and on changes in stocks.
• Net export is the difference of the total value of merchandise exports and the total value of the merchandise imports.
• The national product and national income accounts are collectively known as the national accounts.
• GDP is the sum of private consumption expenditures, government consumption expenditures on goods and services, capital formation, and net incomes
• Gross national product is the biggest national income account. It measures economic performance with a longer yardstick than any other accounts.
• There are two reasons why the gross national product could increase. First, it could be due to the increase in the aggregate volume of production. This productivity -driven GNP is desirable because it reflects genuine economic growth. Second, the GNP could increase if prices of goods and services also increase. This inflation-driven increase in the GNP is not desirable because it indicates a poor economic performance.
• To distinguish further between a desirable GNP increase and an undesirable GNP increase, economists use the concepts of nominal GNP and real GNP.
• Nominal GNP is the current-price GNP. Current prices are the prevailing market prices during the accounting year. They are a good basis for measuring the performance of the economy during that production year.
• A price index is a number that shows how much an average of prices has changed over time.
• Another useful price index is the consumer price index (CPI). It measures the average changes in the retail prices of a market basket.
• Weighted price is the quantity or weight of purchased items multiplied by the product unit price. The total weighted price is the sum of the weighted prices in a given year.
• short term economic growth is generally from one to five years and a long term economic growth is six years and beyond.
• Externality is a side effect or consequence of an industrial or commercial activity that affects other parties.
• the human development index (HDI) came about. It is a measure of how well a country has performed not only in terms of real income growth but also in terms of social indicators, such as the people's ability to lead a long and healthy life, to acquire knowledge and skills, and to have access to resources needed in order to afford them a decent standard of living (National Statistical Coordination Board)
• An intermediate product on the other hand is a good intended for further processing or investment.
• Gross domestic capital formation refers to the country's gross domestic investment.
• market basket refers to the good and services households commonly purchase for their consumption in a period of time (like one week).
• depreciation allowance is the payment for the use of capital acquired in the past
• GNP is also defined as the market value of all final goods and services produced by the citizens of the country in one year