Assessing the Economy's Performance
National Income Accounting
This technique is used to measure the overall production of a country's economy as well as other related variables
Value added
The amount by which the value of an article is increased at each stage of its production, exclusive of initial costs.
Nondurable goods
A consumer good with an expected life of less than three years
Net Exports
Exports minus Imports
Personal income
the earned and unearned income available to resource suppliers and others before the payment of personal taxes
Gross domestic product (GDP)
A monetary measure of the market value of all the final goods and services produced in a specific time period, often annually.
Expenditures approach
The methods that adds all expenditures made for the final goods and final services to measure the GDP
service
an act or use for which a consumer or government is willing to pay
Taxes on production and imports
A National income accounting category that includes such taxes as sales, excise, business property taxes, and tariffs that firms treat as costs of producing a product and pass on (in whole or in part) to buyers by charging a higher price.
Disposable Income
Personal income less personal taxes; income available for personal consumption expenditures and personal saving
Intermediate Goods
Products that are produced for resale
Income Approach
The method that adds all the income generated by the production of final goods and final services to measure the GDP
Gross private domestic investment
Expenditures for newly produced capital goods and for additions to inventories
National Income
Total income earned by resource suppliers for their contributions to gross domestic product plus taxes on production and imports; the sum of wages and salaries, rent, interest, profit, proprietors' income, and such taxes.
Nominal GDP
GDP measure in terns of the price level at the time of measurement
Final Goods
Goods that have been purchased for final sale
Personal Consumption Expenditures
The expenditures of households for both durable and nondurable consumer goods
net private domestic investment
Gross private domestic investment less consumption of fixed capital; the addition to the nations stock of capital during a year
Consumption of fixed capital
An estimate of the amount of capital worn out or used up (consumed) in producing the gross domestic product; also called depreciation.
Price index
An index number that shows how the weighted-average price of a "market Basket" of goods changes over time relative to its price in a specific base year
Multiple counting
Counting the same good or product more than once
Durable Goods
A consumer good with an expected life of three or more years
Government purchases
Expenditures by government for goods and services that gov. consumes in providing public services as well as expenditures for publicly owned capital that has along lifeline
Net Domestic Product (NDP)
Gross domestic product less the part of the year's output that is needed to replace the capital goods worn out in producing the output; the nation's total output available for consumption or additions to the capital stock.
Base year
The year with which other years are compared when an index is constructed