AGMT

• 1)     Economic Growth – increase in the number of goods and services produced in the country. (leads to economic development - improvement in the quality of life of the people)
• Full Employment – the presence and availability of jobs for those who are able and willing to work
• Economic Efficiency – achieving the maximum fulfillment of wants using the available productive resources
• 1)     Price Stability – absence of wide fluctuations in prices.
• Economic Freedom – the freedom to do economic activities within the legal framework of the economy.
• Economic Security – the assurance of the fulfillment of economic needs of every member of society, including the handicapped
• 1)     Equitable distribution of income – narrowing the gap between rich and poor
• 1)     Balance of Trade – a balance between exports and imports
• In return, the contributors of these factors receive their payments such as wages for labor and rents for the landlords, interest for the capitalist and profits for the entrepreneur. The sum of all these factors is the national income.
• The Gross National Product (GNP) is the sum of the final market values of all final goods and services produced by citizens in given period of time
• §   Final Market Value – is the monetary amount by which a product would have been sold in the market.
• §   Final Goods and Services – refer to goods and services produced within a year for final use of consumers. These goods and services are sold or remain unsold.
• §   Public Transfer of Payments – are those given by the government to individuals or household but does not contribute production in return for them.
• §   Private Transfer of Payments – involves transfer of funds from a private individual to another and which does not entail production.
• Activities that are excluded in the computation of GNP

   

  a.     Non-productive transactions such as purely financial transaction

  b.     Second hand sales

  c.      Underground economy
• Gross National Product is measured by using these approaches:

   

  1.     Expenditure Approach

  2.     Income Approach

  3.     Industrial Origin Approach
• 1.     Personal Consumption Expenditure of Goods and Services which includes:

  Ø  durable consumer goods

  Ø  non-durable consumer goods

  Ø  services
• 1.     Gross Private Domestic Investment. It is an expenditure on new capital goods. It includes the following:

  Ø  inventories

  Ø  final purchases of machinery, tools and equipment

  all construction including residential
• 1.     Government Purchases of Goods and Services. It is the sum of expenditures incurred by the government which includes:

  Ø  national government spending

  Ø  local spending

  Ø  government payroll (salaries and wages of public servants)

  payment of debts
• Exports – refer to products produced domestically but sold abroad
• Imports – refer to products produced abroad, but are bought and consumed domestically
• A negative export is derived when import is greater than export
• A positive net export when export is greater than import
• Net factor income from abroad refers to the differential between the income earned by the citizens who earned resources used in the production process abroad and the income of foreigners who own resources used in the production process here in the Philippines.

   
• 1)     Rent Income – representing the money income payments by the supplies of various resources.
• 1)     Interest Income – or the money income payment that flows from the business enterprises to owners of the monetary capital.
• Compensation of Employees (Wages, salaries) – referring to the money income payments for the services rendered by labor including those required by law and those that are a direct result from labor management negotiations which does not represent payments for actual services rendered.
• 1)     Profits – or proprietor’s income and corporate profit. It should include profits earned by business organizations. Corporate profit is composed of corporate income, and taxes which flow to the national or local government, while dividends flow to the stockholders and retained corporate earnings or are declared as undistributed corporate profits.
• Indirect Business Taxes – are levied on business in the government
• 1)     Capital Consumption Allowance (Depreciation) – is the allowance for wear and tear of machinery tools and equipment. This is included in the income account especially by the business with the idea that production cannot occur without impairing the quality and usefulness of the aforementioned items.
• Subsidies – refer to the payment of funds, goods, or services by a government, business, or household for which it receives no good or service in return.
• Expanding/Growing Economy - when Gross Private Domestic Investment exceeds or is greater than depreciation (replacement investment), the economy is expanding because the stock of capital goods is increasing
• Another method in computing the GNP is the industrial origin approach.
• the primary sector of an economy which includes agriculture, fishery and forestry;

   
• 1)     the secondary sector or the industry sector, including the following: mining, quarrying, manufacturing, construction, electricity, gas and water;
• the tertiary sector or service sector of an economy, which includes transportation, communication and storage, trade finance, real estate and dwellings, private and government services
• 1)     net factor income from the rest of the world, including the foreign exchange remittance and other earnings from the government assets abroad.

   
• Depreciation - is an allowance for capital goods likes machines which have been “consumed” in the process of production
• Gross National Product (GNP) - is the sum of market value of all goods and services produced by the citizens of a country during a given time regardless of their location.
• Gross Domestic Product (GDP) - is the sum of the market value of all final goods and services produced within a country.