Notional Accounts Derived from Business Accounts
You might wonder where on earth econosaists find all the data for the national accounts. In practice,
government economists draw on a wide array of sources, including surveys, income-tax returns, retailsales
statistics. and employment data.
The most important source of data is business accounts. An account for a firm or nation is a numerical record of all flows (outputs, costs, etc.) during a given ‘period. We can show the relationship between business accounts and national accounts by constructing the accounts for an economy made up only, of farms. The top half of Table 21-1 shows the results of a year’s farming operations for a single, typical farm. We put sales of final products on the left-hand side and the various costs of production on the right. The bottom half of Table 21-1 shows how to construct the GDP accounts for our simple agrarian economy in which all final products are produced • on 10 million identical farms. The national accounts simply add together or aggregate the outputs and costs of the 10 million identical farms to get the two different measures of GOP.
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