Measuring the Aggregate Economy

Measuring the Aggregate Economy

National Income Accounting

- A set of meaning for measuring economic activity in the aggregate economy, that is, the entire economy.

- Provides a way of measuring total production broken down into sub-aggregates such as consumption, investment, and personal income; and defines the relationship among these sub-aggregates to analyze how much the nation is producing and consuming.

National Income Accounting

Purpose: To obtain some measure of the performance of the aggregate economy.

GNP

The total final output of citizens and businesses of an economy in a one year period

Disposable Personal Income

The total amount of money available for an individual or population to spend or save after taxes have been paid. As an economic measure it is abbreviated DPI.

(http://dictionary.reference.com/)

Rise and fall of GDP

3 Ways to Calculate GDP

• Expenditure Method (expenses)

• Income Method (earnings)• Value Added

Value Added

The enhancement a company gives its product or service before offering the product to customers.

Value added is used to describe instances where a firm takes a product that may be considered a homogeneous product, with few differences (if any) from that of a competitor, and provides potential customers with a feature or add-on that gives it a greater sense of value.

A value add can either increase the product's price or value

For example, offering one year of free support on a new computer would be a value-added feature. Additionally, individuals can bring value add to services that they perform, such as bringing advanced financial modeling skills to a position in which the hiring manager may not have foreseen the need for such skills.

What’s wrong with GDP?1)GDP treats crime, divorce and natural disasters as economic gain.

2)GDP ignores the non-market economy of household and community.

3)GDP treats the depletion of natural capital as income.4)GDP increases with polluting

activities and then again with

clean-ups.5)GDP takes no account of

income distribution.

Genuine Progress Indicator

SOURCES:https://google.com.ph/http://www.investopedia.com/terms/v/valueaddedhttp://grizzly.la.psu.edu/~bickes/nia.pdfhttp://beta.tutor2u.net/economics/reference/measuring-national-incomehttp://www.econlib.org/library/Enc/NationalIncomeAccounts.htmlhttp://www.sustainwellbeing.net/gpi.htmlhttp://www.slideshare.net/mariethereza/report-in-economics-chapter-10national-income-accountinghttp://mospi.nic.in/Mospi_New/upload/SYB2014/CH-3-NATIONAL%20PRODUCT/National%20Accounts%20Statistics.pdf