Академический Документы
Профессиональный Документы
Культура Документы
Accounting
National income accounting
(NIA)
is the measurement of indicators
of national output/income; .e.g.
GDP, GNP
Definitions
Ackleys Definition:
.. Sum of all individual incomes
Broomans Definition:
..sum of total final expenditure by the
residents of the country
Samuelsons Definition:
.. Measure of overall annual flow of goods
and services in an economy.
Circular flow diagram
FIRMS HOUSEHOLDS
Land, labor
Inputs for
and capital
Production MARKETS FOR
FACTORS OF
PRODUCTION
Income (=GDP)
Wages, rent,
interest and
profit (=GDP)
Flow of goods & services
n n
GDP V P
i1
i
i1
i Qi
GDP includes final goods
and services only
Final goods - goods and services
that are not purchased for the
purpose of producing other goods
and services or for resale
Eg. Rice (final) or unhusked rice
(intermediate product)
Sales P 20,000
Expenses:
Wages 8000
Rent 4000
Interest 2000
Total 14,000
Profit 6,000
Value of
Stage of Prodn intermedi Value Value-
ate good of added
Sales
Farmer - Palay 12,000 12,000
Rice Miller 12,000 15,000 3,000
-Milled Rice
Retailers - Rice 15,000 20,00 5,000
0
GDP= Total Value 20,000
Notes of the 3 approaches
The expenditure approach, income approach,
and the value-added approach all come up
with the same estimate of the GDP. They are
equivalent approaches.
In the income approach, profit is also
considered a payment to the entrepreneur. So
the incomes are (1) wages, (2) rent, (3)
interest, and (4) profit. Profit adjusts to make
the sum equal to the final value of the good.
In the value added approach, only the value
added in each stage of production are
included. If we add the value of intermediate
product with the value of the final product, we
commit the sin of double-counting.
At each stage of production, the value-added is
equal to wages, interest, rent, and profit.
Therefore the value of the final product is
likewise the same of all payments to the
factors of production.
The distinction between
GDP and GNP
GNP = GDP + Net Factor Income from the Rest of
the World (NFIRW)
NFIRW - measures the difference between the
earnings of Pakistani residents in other countries
and foreign residents in the Pakistan
The distinction between GDP
and GNP
YEAR 1 YEAR 2
QUANTITY
Nominal GDP
Real GDP 100.
GDP deflator
GDP per capita
GDP
GDP per capita
population
Personal Income and DPI
Personal Income:
PI= NI- (corporate profit tax+ undistributed
corporate profits+ contribution to social security +
transfer payments)
NATIONAL INCOME:
Personal Income:
PI= NI- (corporate profit tax+ undistributed corporate
profits+ contribution to social security + transfer payments)
Real GDP
Now let's calculate real GDP, using 1998 as the base
year.
real GDP 1997 = (.48)(475) + (1050)(70) + (8)(380) = $
76,786
real GDP 1998 = (.48)(510) + (1050)(85) + (8)(390) = $
92,614.80
real GDP 1999 = (.48)(500) + (1050)(100) + (8)(400) =
$108,440
From 1997 to 1999 real GDP has increased by
PROBLEMS OF
MEASURING NI
Shortage of Statistical Data
Lack of trained manpower
Free Services
Demonetized Goods
Ignorance and Illiteracy
Price Fluctuation