1. Ch. 13.1: National Income Accounting
Economics
Ch. 13.1: National Income Accounting p
Learning Target: Understand how economists measure the economy’s performance; GDP, NDP, NI, PI, DPI, transfer payments, net exports

2. 2. Explain what Transfer Payments are and give an example
ECONOMICS Ch. 13.1: National Income Accounting Learning Target: Understand how economists measure the economy’s performance; GDP, NDP, NI, PI, DPI, transfer payments, net exports
Success Criteria
You should be able to…
1. Explain how a nation’s economy is measured using GDP, NDP, NI, PI and DPI
2. Explain what Transfer Payments are and give an example
3. Show how to calculate Net Exports

3. How do we usually measure the economic performance of a nation?
National Income Accounting.
Deals with the economy’s overall output and income.
A measurement of the national economy’s performance.

4. What are the five major statistics used to measure the nation’s economy?
1. Gross Domestic Product (GDP)
2. Net Domestic Product
3. National Income
Personal Income
Disposable Personal Income

5. What is GDP and how is it measured?
The total dollar value of all final goods and services produced in a nation in a single year.

6. What is the measuring value (unit) used for GDP?
The total value of the items produced using the dollar ($).
GDP is expressed in dollar terms.

7. How do we measure GDP?
Only the value of the final good or service is used for measuring GDP. Parts of a product are not counted, only the final product.
Ex.: We count the cell phone, not any of the parts (battery, etc.)
Used items are NOT counted, only new production.

8. Let’s Review
Discuss at your table.
What would happen if a nation counted the sales of used items in its GDP?
Why are only new and final goods counted in GDP?
Are you on target (white, black, blue, red or yellow)?
Did you hit the bullseye?
Learning Target: Understand how economists measure the economy’s performance; GDP, NDP, NI, PI, DPI, transfer payments, net exports

9. 2. Explain what Transfer Payments are and give an example
ECONOMICS Ch. 13.1: National Income Accounting Learning Target: Understand how economists measure the economy’s performance; GDP, NDP, NI, PI, DPI, transfer payments, net exports
Success Criteria
You should be able to…
1. Explain how a nation’s economy is measured using GDP, NDP, NI, PI and DPI
2. Explain what Transfer Payments are and give an example
3. Show how to calculate Net Exports

10. Imports
Products bought from other countries (brought in to the U.S.).
Exports
Products sold to other countries (shipped out of the U.S.).

11. How do we compute
GDP?
Add the expenditures in 4 categories:
GDP = Consumer sector +
Investment sector +
Government sector +/–
Net exports
See Figure 13.2, page 338

12. Exports – Imports = Net Exports
How do we compute Net Exports?
The difference between a nation’s exports and imports.
Exports – Imports = Net Exports
Can be negative.

13. Let’s Review Consumer Sector Investment Sector Government Sector
Discuss at your table.
List the four categories economists use to derive GDP and two examples of each.
Are you on target (white, black, blue, red or yellow)?
Did you hit the bullseye?
Consumer Sector
Investment Sector
Government Sector
Net Exports
Learning Target: Understand how economists measure the economy’s performance; GDP, NDP, NI, PI, DPI, transfer payments, net exports

14. 2. Explain what Transfer Payments are and give an example
ECONOMICS Ch. 13.1: National Income Accounting Learning Target: Understand how economists measure the economy’s performance; GDP, NDP, NI, PI, DPI, transfer payments, net exports
Success Criteria
You should be able to…
1. Explain how a nation’s economy is measured using GDP, NDP, NI, PI and DPI
2. Explain what Transfer Payments are and give an example
3. Show how to calculate Net Exports

15. The loss of value of a good due to wear and tear or age.
What is Depreciation?
The loss of value of a good due to wear and tear or age.
Examples:

16. What is the Net Domestic Product (NDP)?
The value of the nation’s total output (GDP) minus the total value lost through depreciation on equipment. NDP is a better measure than GDP because it accounts for depreciation.
NDP = GDP – Depreciation

17. What is National Income (NI)?
Total income earned by everyone in the economy.

18. What five sources of income make up the national income?
Wages and salaries
Income of the self-employed
Rental income
Corporate profits
Interest on savings and
investments

19. Personal Income (PI)
Total income that individuals receive before paying taxes.
Disposable Personal Income (DPI)
Income remaining for people to spend or save after all taxes have been paid.

20. What are Transfer payments?
Welfare and other supplementary payments that a state or the federal government makes to individuals.

21. Let’s Review What is the difference between GDP and NDP?
Discuss at your table.
What is the difference between GDP and NDP?
What are some of the sources of income that make up National Income?
What is the difference between PI and DPI?
What is a transfer payment?
Are you on target (white, black, blue, red or yellow)?
Did you hit the bullseye?
Learning Target: Understand how economists measure the economy’s performance; GDP, NDP, NI, PI, DPI, transfer payments, net exports

22. 2. Explain what Transfer Payments are and give an example
ECONOMICS Ch. 13.1: National Income Accounting Learning Target: Understand how economists measure the economy’s performance; GDP, NDP, NI, PI, DPI, transfer payments, net exports
Success Criteria
You should be able to…
1. Explain how a nation’s economy is measured using GDP, NDP, NI, PI and DPI
2. Explain what Transfer Payments are and give an example
3. Show how to calculate Net Exports

23. Figure 13.1, page 336
According to the graph, what is the difference in dollars between gross domestic product and disposable personal income?
 Pair Share

24. Pair Share GDP – DPI 14.0 – 10.1 = 3.9 $3.9 trillion
Figure 13.1, page 336
According to the graph, what is the difference in dollars between gross domestic product and disposable personal income?
 Pair Share
GDP – DPI
14.0 – 10.1 = 3.9
$3.9 trillion

25. Economic Concepts Student Activity 13 GDP
View the pictures on the following slides.
Answer the questions on the handout with a partner and discuss them at your table.

28. SUCCESS CRITERIA
#WeLoveToLearn

29. 2. Explain what Transfer Payments are and give an example
ECONOMICS Ch. 13.1: National Income Accounting Learning Target: Understand how economists measure the economy’s performance; GDP, NDP, NI, PI, DPI, transfer payments, net exports
Success Criteria
You should be able to…
1. Explain how a nation’s economy is measured using GDP, NDP, NI, PI and DPI
2. Explain what Transfer Payments are and give an example
3. Show how to calculate Net Exports

30. Proof of Success / Success Criteria (review your Learning Target(s))
1) I now know that…
a. ______________________________________________________________
______________________________________________________________
b. ______________________________________________________________
c. ______________________________________________________________
2) ONE word that might summarize today’s topic(s) is
3) My question is ______________________________________________
Did you hit the Learning Target? Circle a color. White Black Blue Red Yellow or Bullseye