Search results
Results from the WOW.Com Content Network
The expenditure approach is basically an output accounting method. It focuses on finding the total output of a nation by finding the total amount of money spent. This is acceptable to economists, because, like income, the total value of all goods is equal to the total amount of money spent on goods.
The expenditure approach works on the principle that all of the products must be bought by somebody, therefore the value of the total product must be equal to people's total expenditures in buying things. The income approach works on the principle that the incomes of the productive factors ("producers", colloquially) must be equal to the value ...
The table summarizes national income on the left (debit, revenue) side and national product on the right (credit, expense) side of a two-column accounting report. Thus the left side gives GDP by the income method, and the right side gives GDP by the expenditure method. The GDP is given on the bottom line of both sides of the report.
Government spending or expenditure includes all government consumption, investment, and transfer payments. [1] [2] In national income accounting, the acquisition by governments of goods and services for current use, to directly satisfy the individual or collective needs of the community, is classed as government final consumption expenditure.
expenditure accounts, which show how disposable income is either consumed or saved. The balancing item of these accounts is saving. The balancing item of these accounts is saving. Capital accounts, which record the net accumulation, as the result of transactions, of non-financial assets; and the financing, by way of saving and capital transfers ...
Conversely, if income is greater than Y ', aggregate expenditure is less than aggregate income and firms will find that inventories are increasing. They will fire workers, and incomes will fall. Y ' is the only level of income at which there is no desire on the part of firms to change the number of people they employ.
Aggregate income [1] [2] [3] is the total of all incomes in an economy without adjustments for inflation, taxation, or types of double counting. [4] Aggregate income is a form of GDP that is equal to Consumption expenditure plus net profits. 'Aggregate income' in economics is a broad conceptual term.
The ability-to-pay approach treats government revenue and expenditures separately. Taxes are based on taxpayers’ ability to pay; there is no quid pro quo. Taxes paid are seen as a sacrifice by taxpayers, which raises the issues of what the sacrifice of each taxpayer should be and how it should be measured: