Topic 8 GDP - Measuring National Output and National Income...

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Measuring National Output and National Income
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National Income Accounting National income accounting is data collected and published by the government describing the various components of national income and output in the economy. The U.S. Department of Commerce is responsible for producing and maintaining the “National Income and Product Accounts” that keep track of GDP. Malaysia is Department of Statistics Malaysia
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National Income Accounting enable economist and policymaker to: 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, constant, or declined. Formulate policies that will safeguard and improve the economy’s health. National Income Accounting
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Gross Domestic Product Gross domestic product (GDP) is the total market value of all final goods and services produced within a given period by factors of production located within a country.
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Final Goods and Services The term final goods and services in GDP refers to goods and services produced for final use. Intermediate goods are goods produced by one firm for use in further processing by another firm.
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Value Added Value added is the difference between the value of goods as they leave a stage of production and the cost of the goods as they entered that stage. In calculating GDP, we can either sum up the value added at each stage of production, or we can take the value of final sales.
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Production Process Production of Petrol (Hypothetical Numbers) STAGE OF PRODUCTION VALUE OF SALES VALUE ADDED (1) Oil drilling RM .70 RM .70 (2) Refining 1.35 .65 (3) Shipping 1.70 .35 (4) Retail sale 2.10 .40 Total 5.85 RM 2.10
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Exclude Nonproduction Transactions GDP ignores all transactions in which money or goods change hands but in which no new goods and services are produced. Exclude financial transactions - Public transfer payments - Private transfer payments - Stock (and bond) market transactions Exclude second hand sales
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Gross Domestic Product
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