Essentials of Economics, 3rd ed

1
National Income Accounts (UK 2001)
2
National income accounts

• The three methods of national income accounting

3
The circular flow of national income and
expenditure
4
The circular flow of national income and
expenditure
(1) Production
(2) Incomes
(3) Expenditure
5
National income accounts

• Methods of national income accounting
• (a) The product approach

6
UK GVA (product-based measure) 2001
0.9 4.7 17.5 5.4 12.2 3.4 8.0 0.8 24.0 4.8
13.0 5.2 100.0
Agriculture, forestry and fishing 8 241
m Mining, energy and water supply 41 378
m Manufacturing 153 132 m Construction 47
327 m Wholesale and retail trade repairs 106
766 m Hotels and restaurants 29 359m Transport
and communication 70 252 m Banking, finance,
insurance, etc. 6 667 m Letting of property
209 839 m Public administration and defence
42 096 m Education, health and social work
114 069 m Other services 45 101 m Total GVA
874 227 m
7
UK GVA (product-based measure) 2001
0.9 4.7 17.5 5.4 12.2 3.4 8.0 0.8 24.0 4.8
13.0 5.2 100.0
Agriculture, forestry and fishing 8 241
m Mining, energy and water supply 41 378
m Manufacturing 153 132 m Construction 47
327 m Wholesale and retail trade repairs 106
766 m Hotels and restaurants 29 359m Transport
and communication 70 252 m Banking, finance,
insurance, etc. 6 667 m Letting of property
209 839 m Public administration and defence
42 096 m Education, health and social work
114 069 m Other services 45 101 m Total GVA
874 227 m
8
UK GVA (product-based measure) 2001
0.9 4.7 17.5 5.4 12.2 3.4 8.0 0.8 24.0 4.8
13.0 5.2 100.0
Agriculture, forestry and fishing 8 241
m Mining, energy and water supply 41 378
m Manufacturing 153 132 m Construction 47
327 m Wholesale and retail trade repairs 106
766 m Hotels and restaurants 29 359m Transport
and communication 70 252 m Banking, finance,
insurance, etc. 6 667 m Letting of property
209 839 m Public administration and defence
42 096 m Education, health and social work
114 069 m Other services 45 101 m Total GVA
874 227 m
Percentage of GVA
9
UK GDP (product-based measure) 2001
GVA (gross value added at basic prices) 874
227m plus Taxes on products 120 499m less
Subsidies on products 6 712m GDP (at
market prices) 988 014m
10
UK GDP (product-based measure) 2001
GVA (gross value added at basic prices) 874
227m plus Taxes on products 120 499m less
Subsidies on products 6 712m GDP (at
market prices) 988 014m
11
UK GDP (product-based measure) 2001
GVA (gross value added at basic prices) 874
227m plus Taxes on products 120 499m less
Subsidies on products 6 712m GDP (at
market prices) 988 014m
12
National income accounts

• Methods of national income accounting
• (b) The income approach

13
UK GVA by category of income 2001
63.6 27.3 6.9 2.2 100.0
Compensation of employees (wages and
salaries) 556 371 m Operating
surplus (gross profit, rent and interest of
firms government and other institutions) 238 625
m Mixed incomes 60 073 m Tax less subsidies on
production (other than those on products)
plus statistical discrepancy 19 158m Total GVA
874 227m
14
UK GVA by category of income 2001
63.6 27.3 6.9 2.2 100.0
Compensation of employees (wages and
salaries) 556 371 m Operating
surplus (gross profit, rent and interest of
firms government and other institutions) 238 625
m Mixed incomes 60 073 m Tax less subsidies on
production (other than those on products)
plus statistical discrepancy 19 158m Total GVA
874 227m
15
UK GVA by category of income 2001
63.6 27.3 6.9 2.2 100.0
Compensation of employees (wages and
salaries) 556 371 m Operating
surplus (gross profit, rent and interest of
firms government and other institutions) 238 625
m Mixed incomes 60 073 m Tax less subsidies on
production (other than those on products)
plus statistical discrepancy 19 158m Total GVA
874 227m
Percentage of GVA
16
UK GDP (product-based measure) 2001
GVA (gross value added at basic prices) 874
227m plus Taxes on products 120 499m less
Subsidies on products 6 712m GDP (at
market prices) 988 014m
17
National income accounts

• Methods of national income accounting
• (c) The expenditure approach

18
UK GDP by category of expenditure, GNY and NNY
2001
million Consumption expenditure of households
and NPISH (C) 655 265
19
UK GDP by category of expenditure, GNY and NNY
2001
million Consumption expenditure of households
and NPISH (C) 655 265 Government final
consumption (G) 190 663
20
UK GDP by category of expenditure, GNY and NNY
2001
million Consumption expenditure of households
and NPISH (C) 655 265 Government final
consumption (G) 190 663 Gross capital formation
(I) 164 048
21
UK GDP by category of expenditure, GNY and NNY
2001
million Consumption expenditure of households
and NPISH (C) 655 265 Government final
consumption (G) 190 663 Gross capital formation
(I) 164 048 Exports of goods and services (X) 268
451
22
UK GDP by category of expenditure, GNY and NNY
2001
million Consumption expenditure of households
and NPISH (C) 655 265 Government final
consumption (G) 190 663 Gross capital formation
(I) 164 048 Exports of goods and services (X) 268
451 less Imports of goods and services (M) ?290
912
23
UK GDP by category of expenditure, GNY and NNY
2001
million Consumption expenditure of households
and NPISH (C) 655 265 Government final
consumption (G) 190 663 Gross capital formation
(I) 164 048 Exports of goods and services (X) 268
451 less Imports of goods and services (M) ?290
912 Statistical discrepancy 499 Gross domestic
product (GDP) (at market prices) 988 014
24
National income accounts

• From GDP to
• Net National Income

25
UK GDP by category of expenditure, GNY and NNY
2001
million Consumption expenditure of households
and NPISH (C) 655 265 Government final
consumption (G) 190 663 Gross capital formation
(I) 164 048 Exports of goods and services (X) 268
451 less Imports of goods and services (M) ?290
912 Statistical discrepancy 499 Gross domestic
product (GDP) (at market prices) 988 014 plus Net
income from abroad 5 756 Gross national income
(GNY) 993 770
26
UK GDP by category of expenditure, GNY and NNY
2001
million Consumption expenditure of households
and NPISH (C) 655 265 Government final
consumption (G) 190 663 Gross capital formation
(I) 164 048 Exports of goods and services (X) 268
451 less Imports of goods and services (M) ?290
912 Statistical discrepancy 499 Gross domestic
product (GDP) (at market prices) 988 014 plus Net
income from abroad 5 756 Gross national income
(GNY) 993 770 less Capital consumption
(depreciation) -111 275 Net national income
(NNY) 882 495