Macroeconomics

Paper Summary:

This paper explains that Expenditure is directly proportional to Output, which in turn is directly proportional to Income. The author points out that GDP is the market value of all the final goods and services, which are produced in the nation during a particular year, but does not include production overseas by U.S. companies, although it includes the production facilities in U.S. by overseas companies operating in the U.S. such as the Toyota Motors. The paper relates that Aggregate Output is the total quantity of output, which is produced and supplied in a particular duration; Aggregate Income is the total amount of income, which is received by all the factors of production within an economy during a given period.

Table of Content
Key Features of National Accounts
Income Method
Output method
Expenditure method
Aggregate Income and Aggregate Output

From the Paper:

"At this point, it is pertinent to explore briefly into the total system of national accounts and specifically at the financial linkages between the various sectors of the economy. For the purpose of building the national accounts, the economy has been subdivided into four basic sectors. These are the (a) Personal Sector - which primarily constitutes the household sector (b) Corporate sector - comprising of Companies and Financial Institutions - F.I.s and the public corporations (c) General Government sector - comprising of Central and Local Government authorities (d) Foreign sector - that comprises of all individuals, firms and government bodies outside USA. In case of each of these sectors, there is the identical set of basic accounts that keep an account of all the receipts and outflow of that sector regardless of they being factor incomes, transfers, taxes, current or capital expenditures."

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