National output and value added . investment on goods not for present
. Note: some firms produce output that consumption (ex. Inventories, capital
are used as inputs by other firms, and goods)
these other firms produce outputs that . change in inventories: basically they
are used as inputs by other firms keep inventories of inputs so they can
. Intermediate goods: goods that are avoid input delivery problems, and keep
outputs of some firms and used as input output inventory to avoid production
for other firms problems
. Final goods: goods that are products . accumulation of inventories during
that are not used as input any given year counts as positive
. Value-added method: amount of value investment for that year because it
that firms and workers add to their represents goods produced but not used
products less the cost of intermediate for consumption
goods. . New plant and equipment: the process
𝑣𝑎𝑙𝑢𝑒 𝑎𝑑𝑑𝑒𝑑 = 𝑠𝑎𝑙𝑒𝑠 𝑟𝑒𝑣𝑒𝑛𝑢𝑒 − 𝑖𝑛𝑡𝑒𝑟𝑚𝑒𝑑𝑖𝑎𝑡𝑒 𝑔𝑜𝑜𝑑𝑠 of buying or building new plant and
equipment
. Capital stock: the aggregate
National income accounting: Basics quantity of capital goods
. Note: the value of domestic output . Fixed Investment: the creation
(value added) is equal to the value of of new plant and equipment
expenditure on that output and is also . New Residential housing: keep in mind
equal to the total income claims that the building of a NEW house is
generated by producing that output investment
. Gross and net investment: is the total
GDP from the expenditure side amount of investment that occurs in the
. basically the long ass formula country and is divided into,
. 𝑌 = 𝐶 + 𝐼 + 𝐺 + 𝑁𝑋 . Replacement investment: the
. 𝑁𝑋 = 𝑋 − 𝐼𝑀 amount of investment required to
. Problem set: repairing machinery will replace that part of the capital stock
count as investment that loses its value through wear and
tear (depreciation)
Consumption expenditure .
. basically consumption of all final 𝑁𝑒𝑡 𝐼𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡 = 𝐺𝑟𝑜𝑠𝑠 𝑖 − 𝐷𝑒𝑝𝑟𝑒𝑐𝑖𝑎𝑡𝑖𝑜𝑛
goods and services . positive net investment = growing
capital stock
Investment expenditure . Negative net investment: decreasing
capital stock
. Note: some firms produce output that consumption (ex. Inventories, capital
are used as inputs by other firms, and goods)
these other firms produce outputs that . change in inventories: basically they
are used as inputs by other firms keep inventories of inputs so they can
. Intermediate goods: goods that are avoid input delivery problems, and keep
outputs of some firms and used as input output inventory to avoid production
for other firms problems
. Final goods: goods that are products . accumulation of inventories during
that are not used as input any given year counts as positive
. Value-added method: amount of value investment for that year because it
that firms and workers add to their represents goods produced but not used
products less the cost of intermediate for consumption
goods. . New plant and equipment: the process
𝑣𝑎𝑙𝑢𝑒 𝑎𝑑𝑑𝑒𝑑 = 𝑠𝑎𝑙𝑒𝑠 𝑟𝑒𝑣𝑒𝑛𝑢𝑒 − 𝑖𝑛𝑡𝑒𝑟𝑚𝑒𝑑𝑖𝑎𝑡𝑒 𝑔𝑜𝑜𝑑𝑠 of buying or building new plant and
equipment
. Capital stock: the aggregate
National income accounting: Basics quantity of capital goods
. Note: the value of domestic output . Fixed Investment: the creation
(value added) is equal to the value of of new plant and equipment
expenditure on that output and is also . New Residential housing: keep in mind
equal to the total income claims that the building of a NEW house is
generated by producing that output investment
. Gross and net investment: is the total
GDP from the expenditure side amount of investment that occurs in the
. basically the long ass formula country and is divided into,
. 𝑌 = 𝐶 + 𝐼 + 𝐺 + 𝑁𝑋 . Replacement investment: the
. 𝑁𝑋 = 𝑋 − 𝐼𝑀 amount of investment required to
. Problem set: repairing machinery will replace that part of the capital stock
count as investment that loses its value through wear and
tear (depreciation)
Consumption expenditure .
. basically consumption of all final 𝑁𝑒𝑡 𝐼𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡 = 𝐺𝑟𝑜𝑠𝑠 𝑖 − 𝐷𝑒𝑝𝑟𝑒𝑐𝑖𝑎𝑡𝑖𝑜𝑛
goods and services . positive net investment = growing
capital stock
Investment expenditure . Negative net investment: decreasing
capital stock
