Economic growth

expense by the government on wholly nal goods and services. e. g. ages for government employees, the upkeep of troops bases, the maintenance of Air Force One, the maintenance of roads and bridges This division overwhelms government investments such as the maintenance/construction of roads. Does NOT include transfers of wealth such as Social Security, Medicargon, and unemployment bene ts as they argon already accounted for in Consumption. 14/ 31 Net exports The di erence between total exports (to in all other countries) and total imports (from all countries) to the U.S.. If this number is negative, the U. S. is importing more set than it is exporting, in what is called a trade de cit. If this number is positive, the U. S. is experiencing a trade surplus. feeling that these cheers are in basis of the subject countrys currency (U. S. dollars). We scarce consider net exports because 1) we do not want to double ount goods in the gross domestic products of other countries and 2 ) gross domestic product is supposed to measure business in the U. S.Splitting GDP Factor Income Approach We can equivalently express this value in name of how much agents in the U. S. receive for their goods or work. You can think of rms aggregation revenue from the using up described in the national spending approach, and distributing it in the following way Wages Firms birth employees for their work Rent Firms expect landowners and property owners rent Interest Firms pay interest to the owners of the capital they are using Pro t Any revenue that is left aft(prenominal) the above payments are considered protThe sum of these yields GDP, as calculated using the component income approach Y = Wages + Rent + Interest + Prot 16/31 Equivalence of National expending and Factor Income Approaches The sum of all the spending in the U. S. doesnt quite equal the sum of all payments to figures of turnout, so we lack to make a few adjustments Sales taxes arent re ected in the gene i ncome approach, so we deal to add that The national spending approach considers production that occurs before the depreciation of capital (i. e. machines wearing down), so this must be considered when using the divisor income approach. 17/31Economic growthSpending by the government on all nal goods and services. e. g. ages for government employees, the upkeep of war machine bases, the maintenance of Air Force One, the maintenance of roads and bridges This family includes government investments such as the maintenance/construction of roads. Does NOT include transfers of wealth such as Social Security, Medicare, and unemployment bene ts as they are already accounted for in Consumption. 14/ 31 Net exports The di erence between total exports (to all other countries) and total imports (from all countries) to the U.S.. If this number is negative, the U. S. is importing more value than it is exporting, in what is called a trade de cit. If this number is positive, the U. S. is experienc ing a trade surplus. abide by that these values are in terms of the subject countrys currency (U. S. dollars). We just now consider net exports because 1) we do not want to double ount goods in the GDPs of other countries and 2) GDP is supposed to measure production in the U. S.Splitting GDP Factor Income Approach We can equivalently express this value in terms of how much agents in the U. S. receive for their goods or work. You can think of rms accumulate revenue from the spending described in the national spending approach, and distributing it in the following way Wages Firms pay employees for their work Rent Firms pay landowners and property owners rent Interest Firms pay interest to the owners of the capital they are using Pro t Any revenue that is left later on the above payments are considered protThe sum of these yields GDP, as calculated using the factor income approach Y = Wages + Rent + Interest + Prot 16/31 Equivalence of National Spending and Factor Income Approache s The sum of all the spending in the U. S. doesnt quite equal the sum of all payments to factors of production, so we need to make a few adjustments Sales taxes arent re ected in the factor income approach, so we need to add that The national spending approach considers production that occurs before the depreciation of capital (i. e. machines wearing down), so this must be considered when using the factor income approach. 17/31