HOUSEHOLD SECTOR FIRMS PAYMENT FOR RESOURCES (1) GOODS & SERVICES (2) PAYMENT FOR G & S (3) 1]INCOME APPROACH OR METHOD 3]PRODUCTION APPROACH OR METHOD.

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Presentation transcript:

HOUSEHOLD SECTOR FIRMS PAYMENT FOR RESOURCES (1) GOODS & SERVICES (2) PAYMENT FOR G & S (3) 1]INCOME APPROACH OR METHOD 3]PRODUCTION APPROACH OR METHOD 2]EXPENDITURE APPROACH

INCOME APPROACH This method measures GDP as the sum of all incomes earned by the households for use of the factors of production. To calculate GDP by this method, statistics NZ, uses data collected from I)employees - Salaries & Wages II)Businesses - Profits III)Government - indirect taxes Under NZSNA, the terms used are as follows: Compensation of employees (salaries & wages) plusGross operating surplus (profits + depreciation) plusNet indirect taxes (indirect taxes minus subsidies) = GDP Income Approach

HOUSEHOLDSPRODUCERS CONSUMPTION EXPENDITURE (C) INCOME (Y) CALCULATING GDP USING CIRCULAR FLOW DIAGRAM In this simple circular flow diagram, Total Income is equal to consumption expenditure. Y = C

HOUSEHOLDSPRODUCERS (C) (Y) FINANCIAL SECTOR INVESTMENT (I) SAVINGS (S) In this extended circular flow, GDP equals consumer spending plus savings or investment Y = C + I (where I = S)

HOUSEHOLDSPRODUCERS (C) (Y) FINANCIAL SECTOR INVESTMENT (I) SAVINGS (S) In this circular flow, GDP equals Y = C + I + G GOVERNMENT TrT G Where G equals government spending

HOUSEHOLDSPRODUCERS (C) (Y) FINANCIAL SECTOR INVESTMENT (I) SAVINGS (S) In this circular flow, GDP equals Y = C + I + G + (X - M) GOVERNMENT TrT G Where (X - M) is the difference between export receipts and import payments OVERSEAS SECTOR X M

PRODUCTION OR VALUE ADDED APPROACH Calculate the value of goods & services by adding the costs of the firm involved in Production. Statistics NZ does this by collecting via surveys from NZ business. The value of the GROSS OUTPUT of each industry is calculated. The intermediate consumption (goods) sold to other firms towards final goods production is also calculated. These two figures GROSS minus INTERMEDIATE, gives an estimate of the Value Added by the industry. The value added by each of the industries is summed up and overall figure of GDP is arrived at. $100 $150 $50 Extraction of Raw materials (Clay) Manufacture of bricks Retail of Bricks PRODUCTION APPROACH FOR BRICK MAKING