nipa_primer-1 - Measuring the Economy A Primer on GDP and...

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Unformatted text preview: Measuring the Economy A Primer on GDP and the National Income and Product Accounts U.S. DEPARTMENT OF COMMERCE Carlos M. Gutierrez Secretary ECONOMICS AND STATISTICS ADMINISTRATION Cynthia A. Glassman Under Secretary for Economic Affairs BUREAU OF ECONOMIC ANALYSIS J. Steven Landefeld Director Rosemary D. Marcuss Deputy Director September 2007 www.bea.gov Acknowledgments Stephanie H. McCulla and Shelly Smith of the National Income and Wealth Division, Bureau of Economic Analysis (BEA), U.S. Department of Commerce, prepared this Primer. Brent R. Moulton, Associate Director for National Economic Accounts at BEA, and Carol E. Moylan, Chief of the National Income and Wealth Division at BEA, provided overall guidance. Preface This paper introduces new users to the basics of the U.S. national income and product accounts (NIPAs). It discusses the economic concepts that underlie the NIPAs, and it describes the seven NIPA summary accounts. The Primer also provides a brief overview of the derivation of the NIPA measures and a list of references for further information. Comments and questions about the NIPA Primer are invited. Please contact BEA’s National Income and Wealth Division, 1441 L St. NW, BE–54, Washington, DC 20230 or by e-mail at <GDPniwd@BEA.gov>. i Measuring the Economy A Primer on GDP and the National Income and Product Accounts H OW fast is the economy growing? Is it speeding up or slowing down? How does the trade deficit affect eco- nomic growth? What’s happening to the pattern of spending on goods and services in the economy? To answer these types of questions about the economy, economists and policymakers turn to the national in- come and product accounts (NIPAs) produced by the Bureau of Economic Analysis (BEA). The NIPAs are a set of economic accounts that provide information on the value and composition of output produced in the United States during a given period and on the distribution and uses of the income generated by that production. Fea- tured in the NIPAs is gross domestic product (GDP), which measures the value of the goods and services pro- duced by the U.S. economy in a given time period. GDP is one of the most comprehensive and closely watched economic statistics: It is used by the White House and Congress to prepare the Federal budget, by the Federal Reserve to formulate monetary policy, by Wall Street as an indicator of economic activity, and by the business community to prepare forecasts of economic perfor- mance that provide the basis for production, investment, and employment planning. But to fully understand an economy’s performance, one must ask not only “What is GDP?” (or “What is the value of the economy’s output?”), but other questions such as: “How much of the increase in GDP is the result of inflation and how much is an increase in real output?” “Who is producing the output of the economy?” “What output are they producing?” “What income is generated as a result of that production?” and “How is that income output are they producing?...
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nipa_primer-1 - Measuring the Economy A Primer on GDP and...

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