ACC 344 Lecture Notes - Lecture 7: Capital Account, Aggregate Demand, Bookkeeping
National Income
- income earned by factors of production within specific period
- National income = national output
- GNP-depreciation+ net unilateral transfers
- Inflow - outflow + transfers
GNP
- Gross National Product
- value of all final g/s produced by country's factors of production and sold on market in given time
period
- ignores where country-owned entities/employees located... simply looks at if the Corp/employee
works for American payroll
National Income Accounting
- Records all expenditures contributing to country's income/output
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Balance of Payments Accounts
- tracks both changes in country's indebtedness to foreigners and fortunes of its export/import
competing industries...overall statement of country's economic transactions with the rest of the world
over some period
- connects foreign transactions and national money supplies
- BOP account consists of Current Account + Foreign Account + Capital Account + Errors/omissions
- must balance so all accounts add up to 0 ... CA + FA + capital account = 0
Current Account
- Current Account balance, Net export Foreign Aggregate Demand
- made up of exports/imports, and primary/secondary income (we ignore income in our model)
- shows difference between exports/imports of goods and services
- measures size/direction of international borrowing
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- CA = EX-IM
- CA = ΔIIP change in net foreign wealth
- CA = (Sp-I) + (T-G)... must balance both sides
- CA deficit v. surplus v. balanced
- debit = imports, credit = exports
Unilateral Transfers
- Gifts from residents of foreign countries, added to GNP
- included in CA
GDP
- value of all final goods/services produced within country over given time period
- borders are important
Consumption
- part of GNP purchased by private/domestic consumers
- generally largest % of GNP
Investment
- part of GNP used by firms to produce future output or increase nation's stock of capital
- does NOT include personal investment
Government Purchases
- goods/services federal/state/local government purchases including investment/consumption by
government
- not including transfer payments
- Tax = revenue for govenrment
IIP
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Income earned by factors of production within specific period. Value of all final g/s produced by country"s factors of production and sold on market in given time period. Ignores where country-owned entities/employees located simply looks at if the corp/employee works for american payroll. Records all expenditures contributing to country"s income/output. Tracks both changes in country"s indebtedness to foreigners and fortunes of its export/import competing industriesoverall statement of country"s economic transactions with the rest of the world over some period. Connects foreign transactions and national money supplies. Bop account consists of current account + foreign account + capital account + errors/omissions. Must balance so all accounts add up to 0 ca + fa + capital account = 0. Current account balance, net export foreign aggregate demand. Made up of exports/imports, and primary/secondary income (we ignore income in our model) Shows difference between exports/imports of goods and services. Ca = iip (cid:894)change in net foreign wealth(cid:895)
