Unit 4.1 - National income statistics

• Macroeconomics


  The study of the interactions between economic variables at the whole economy level
• Macroeconomics


  • Uses similar tools for analysis as microeconomics, but is interested in the interactions between economic variables at the whole economy level
• Aggregate demand


  The total demand for an economy's products from households, firms and the government within the country and from households, firms and governments in other countries
• Aggregate supply


  The total output of products made by producers in the country, some in the private sector and some in the public sector
• Economic growth


  A rise in the value of Gross Domestic Product (GDP)
• GDP


  Measures the quantity of goods and services produced in an economy
• Economic growth


  Usually leads to higher living standards and more employment opportunities
• National income


  The value of goods and services produced by a country during a financial year
• Real GDP


  The value of GDP adjusted for inflation

  
• Nominal GDP


  The value of GDP without being adjusted for inflation
• GDP per capita


  The value of total GDP divided by the population of the country, measures the average output per person in an economy

  
• Gross National Product (GNP)


  The market value of all products produced in an annum by the labour and the property supplied by the citizens of one country, includes GDP plus income earned from overseas investments minus income earned by foreign residents

  
• Gross National Income (GNI)


  The sum of value added by all producers who reside in a nation, plus product taxes (subtract subsidies) not included in the value of output, plus receipts of primary income from abroad
• Net property income abroad


  Income earned by domestic residents from their investments abroad minus the income earned by foreign residents from their investments in the domestic economy
• Compensation of employees


  Income of workers who work in another country for a short period of time
• Gross national disposable income


  Measures the income available to the nation for final consumption and gross saving, GNI plus Net transfers
• Multinational companies (MNCs)


  A company that has business operations in at least one country other than its home country
• Income method of measuring GDP

  Totalling all the incomes earned in producing the country's output (Wages + profit + interest earned + rent income)

  
• Expenditure method of measuring GDP

  Totalling all the spending on the country's outputs, adding expenditure on exports and deducting expenditure on imports

  
• Output method of measuring GDP

  Calculating the total production of goods and services of the country, avoiding double counting

  
• Government subsidies to farmers should not be included in measuring GDP by the income method
• Market prices


  Prices charged to consumers, includes indirect taxes on products and deducts subsidies given to producers
• Basic prices


  AKA factor costs, the price charged by producers before the addition of indirect taxes and the deduction of subsidies
• If a product sells for $12 and has a $4 tax on it, the market price is $12 and the basic price is $8
• If a product that a producer would sell for $15 is subsidised at $2 per unit, the market price is $13 and the basic price is $15
• Gross investment


  Total investment expenditure on capital goods in a given time period, linked to GDP and GNI
• Net investment


  Gross investment minus depreciation, only includes net investment, linked to NDP and NNI