Net export is obtained buy subtracting all the money

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Net Export is obtained buy subtracting all the money we spend on foreign goods and services from what foreigners spend on our goods and services. Net export has been ignored in most case because it is only say 1% of GDP. and was always positive until 1971 when there was a trade deficit of 2 billion. By 1987, X n totaled -$159 Billion. The deficit continuing into the decade. In 2002, the deficit was -$426 Billion. Net export = export - import export – import X n = X - M Income Out Consumption (C) is the largest components of GDP
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- 3 - Net export (X n ) is the smallest components of GDP Investments (I) is the most volatile components of GDP EXPENDITURE APPROACH Calendar Year 2002 Component Symbol Amount (in billions) Percentage of GDP Households Expenditures C $7,255 69.9% Business Expenditures I 1,588 15.3% Government Expenditures G 1,960 18.9% Net Exports X n -426 -4.1% GDP $10,377 100.0% Source: U.S. Department of Commerce, Bureau of Economic Analysis Flow of Income Approach Rent + Wages + Interest + Profit INCOME APPROACH Calendar Year 2002 Component Amount (in billions) Percentage of GDP Compensation of Employees $5,964 57.5% Net Interest 678 6.5% Rental Income 153 1.5% Corporate Profits 785 7.6% Proprietors' Income 747 7.2% Indirect Business Taxes less Subsidies 660 6.4% Depreciation 1,390 13.3% GDP $10,377 100.0% Source: U.S. Department of Commerce, Bureau of Economic Analysis Output Approach None
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- 4 - (1) Represent: Rent + Wages + Interest + Profit (2) Represent: Land + Labor + Capital + Entrepreneur (3) Represent: Goods and Services (4) Represent: Households Expenditures also known as Consumption (C) (1) Represent: Income Approach (2) N/A (3) Represent: Output Approach (4) Represent: Expenditures Approach NOTE: It does not matter which approach is used in calculating GDP - One would end up with exactly the same amount for GDP. THINGS TO AVOID WHEN CALCULATING GDP Multiple or Double counting Only expenditures on final products should be counted.
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