Starting Up as Cfo

System of National Accounts (SNA)

Key economic sectors

• NON_GOVERNMENT

– Households

• Supply land, labor and capital to various factor markets • Demand goods and services in the market for products • Decisions on consumption versus savings and investment on the financial markets

– Enterprises

• Make production and investment decision in order to maximize profit • Demand for land, labor and capital • Supply of goods and services

Key economic sectors

• GOVERNMENT

– Regulatory and legal framework – Providing public goods (non-rivalrous and nonexcludable) – Managing the tax system (revenues) and the expenditures

• FINANCIAL

– financial intermediation services for the economy supplied by the banking system and other financial institutions

• REST OF THE WORLD

– Transaction with the non residents

3 approaches of deriving GDP

Production/Supply approach • sum of sectoral gross value added in the economy • Output (value of production) – inputs in the production process (intermediate consumption)

– Gross -Usually used instead of the net concept

• Because of the difficulty of estimating the depreciation • More comparable among countries

– Domestic – only production by residents is captured

3 approaches of deriving GDP

Incomes approach • GDP (at market prices) = GDP (at factor costs) + TSP= W+OS+TSP

– W – wages and other remuneration of employees – OS – operating surpluses of firms (rents, interest, profits) – TSP – taxes less subsidies (sales taxes and other business taxes less subsidies)

3 approaches of deriving GDP

Expenditure approach • GDP = C+I+X-M

– C – final consumption of private and government sector – I – gross investment (fixed capital formation and changes in inventories) – X- Exports of goods and services – M- Imports of goods and services

Other macroeconomic aggregates

Gross National Income (GNI) • GNI = GDP +Yf

– Yf – net factor income from abroad

• GDP (measures final output produced by residents ignores...