Measuring Domestic
Output and
National Income
,Assessing the Economy's Performance
National income accounting measures the economy's
performance by measuring the flows of income and
expenditures over a period of time.
National income accounts serve a similar purpose for
the economy, as do income statements for business
firms.
Consistent definition of terms and measurement
techniques allows us to use the national accounts in
comparing conditions over time and across countries.
The national income accounts provide a basis for of
appropriate public policies to improve economic
performance.
,National Income Accounting
Bureau of Economic Analysis compiles
National Income and Product Accounts
Assess health of economy
by comparing levels of production at regular
intervals.
Track long run course of the economy
to see whether it has grown, been constant, or
declined.
Formulate policy
safeguard and improve the economy's health.
, Gross Domestic Product
The primary measure of the economy's performance is its
annual total output of goods and services (aggregate output).
There are several ways to measure aggregate output
depending upon how one wishes to define “an economy.”
Measure of aggregate output
GDP is the monetary measure of the total market value of all
final goods and services produced within a country in one year.
GDP is the value of what has been produced in the economy
over the year, not what was actually sold.
Monetary measure
Money valuation allows the summing of apples and oranges;
money acts as the common denominator.
Output and
National Income
,Assessing the Economy's Performance
National income accounting measures the economy's
performance by measuring the flows of income and
expenditures over a period of time.
National income accounts serve a similar purpose for
the economy, as do income statements for business
firms.
Consistent definition of terms and measurement
techniques allows us to use the national accounts in
comparing conditions over time and across countries.
The national income accounts provide a basis for of
appropriate public policies to improve economic
performance.
,National Income Accounting
Bureau of Economic Analysis compiles
National Income and Product Accounts
Assess health of economy
by comparing levels of production at regular
intervals.
Track long run course of the economy
to see whether it has grown, been constant, or
declined.
Formulate policy
safeguard and improve the economy's health.
, Gross Domestic Product
The primary measure of the economy's performance is its
annual total output of goods and services (aggregate output).
There are several ways to measure aggregate output
depending upon how one wishes to define “an economy.”
Measure of aggregate output
GDP is the monetary measure of the total market value of all
final goods and services produced within a country in one year.
GDP is the value of what has been produced in the economy
over the year, not what was actually sold.
Monetary measure
Money valuation allows the summing of apples and oranges;
money acts as the common denominator.
