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Cards In This Set
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Expenditure Approach
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C + I + G + XConsumption + Investment + Government Spending + Net Exports
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Income Approach
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W + R + I + P + SWages + Rent + Interest + Profit + Stat Adjustment
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Statistical Adjustment
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Statistical Discrepancy is adjusted by NIPA accountants to make the income approach match the outcome of the expenditures approach. (Difference of expenditures from income)
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Durable Goods life?
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Longer than 3 years (autos, furniture)
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Nondurable Goods life?
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< 3 years, food, gas, clothing
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Breakdown of Consumption %?
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10% Durable30% Nondurable60% Services
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Gross Domestic Product
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Aggregate output of final goods and services produced within the country's borders within a specific time period.
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What is NIPA, who produces it?
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NIPA = National Income and Product Accounts, produced by the BEA (Bureau of Economic Analysis)
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Intermediate Good
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Good that is for resell or further processing
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Final Good
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Good for purchase to end user
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Multiple Counting Problem
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Multiple counting of intermediate goods would distort the value of GDP
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Non-production Transactions (excluded from GDP)
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Financial Transactions and Secondhand Sales
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I(g) Investment includes:
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All final purchases of machinery by business, all construction, net change in inventories.
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The trade of paper assets or resale of tangible assets
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Non-investment transactions
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Gross Investment - Depreciation = ?
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Net Investment
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