Macroeconomics is a branch of economic theory. Macroeconomics as a branch of economic theory
Economic theory became a science after the classics substantiated that the main source of a nation's wealth is not the amount of natural resources it has, but an effective form of organization of the social economy. Since then, the subject of economic research has been the relationship between people about the production, distribution, exchange and use of material goods and services in conditions of limited resources. More specifically, the content of economic theory and its simplified structure can be presented in Table. 1.1.
Table 1.1.
| № | Questions of economic theory | Sections of economic science |
| Microeconomics | ||
| 1. | Why, what and in what quantity are the goods demanded in the market? | Demand theory |
| 2. | What determines the range of goods produced? | Choice theory |
| 3. | How is the mode of production determined? | production theory |
| 4. | How are market prices formed? | Theories of competition Theory of pricing and prices |
| 5. | How is income distributed? | Factor distribution theory |
| Macroeconomics | ||
| 6. | What is money and what is its role? | money theory |
| 7. | What determines the price level and its dynamics? | Theory of inflation |
| 8. | What determines the level of employment? | Employment theory |
| 9. | What determines the economic environment? | Cycle theory |
| 10. | How is economic growth carried out? | growth theory |
| 11. | What impact does the government have on the economy? | Economic Policy Theory |
| 12. | What is the impact of foreign countries on the national economy? | theory outwardly economic relations |
In the table, economic theory is divided into 11 global questions, which in modern science there are detailed and not always unambiguous answers in the form of specialized areas of economic knowledge. The latter, in turn, are combined into two parts of economic theory: microeconomics and macroeconomics. This division is based on two factors.
First, microeconomics and macroeconomics differ in the method of studying economic relations. Microeconomic Analysis is devoted to the study of the behavior of individual economic entities (households, firms), the identification of conditions that ensure the activity and implementation of economic plans, and the description of the mechanism for coordinating and harmonizing the totality of individual goals of entities national economy. In the modern economy, this coordination is largely carried out through market pricing of goods and factors of production. Therefore, the mechanism of market pricing is at the center of microeconomic analysis.
Macroeconomic analysis is aimed at identifying the results of the functioning of the national economy as a whole. In macroeconomics, the factors that determine national income, the unemployment rate, the inflation rate, the state of state budget and balance of payments of the country, the rate of economic growth.
Secondly, microeconomics studies the exchange economy in which "commodity money" is used, that is, the function of money is performed by one of the goods produced by firms (for example, gold). This leads to the fact that in microeconomics only subjects of the real sector of the national economy are considered. Macroeconomic analysis proceeds from the existence of "credit money" in the country, the amount of which is regulated by the state (Central or National Bank). Therefore, in macroeconomics, along with the real, the monetary sector and the interaction of both sectors are studied.
Microeconomics combines the theory of consumer choice and the theory of the firm. The subject of microeconomics is the mechanism for making economic decisions at the level of households and firms under given economic conditions, as well as the mechanism for the formation of these "given" conditions as a result of their joint actions. Microeconomics takes as given such variables, the dynamics of which is investigated by macroeconomics. In micro-analysis, consumer income is considered primarily as a given value and the emphasis is on the distribution of household expenditures among various goods and services. Conversely, in macro analysis, total expenditure, total income, disposable income, consumption, etc. themselves are the subject of research. Macroeconomic factors (such as the level of the market interest rate, inflation, unemployment, etc.) influence the decisions of households and firms to save, invest, consume, etc., which in turn determine the magnitude and structure aggregate demand. Therefore, micro- and macroeconomic processes are closely interrelated.
Despite the relative independence of microeconomics and macroeconomics, their conclusions about the essence of economic phenomena and patterns often complement each other. AT last years in economic theory, much attention is paid to the microeconomic consolidation of macroeconomic concepts.
To understand the subject of macroeconomics research, it is important to distinguish between macroeconomic analysis ex post, or economic (national) accounting, and ex ante analysis - macroeconomics in the proper sense of the word. The purpose of the ex ante analysis is to determine the patterns of formation of macroeconomic parameters. Within the framework of national accounting, the values of macroeconomic parameters of the past period are determined in order to obtain information on how the economy has functioned and what results have been achieved. This information serves to determine the degree of implementation of the planned goals, the development of economic policy, comparative analysis economic potentials various countries. Based on ex post analysis data, macroeconomic concepts are being adjusted and new ones are being developed. Ex ante analysis is a predictive modeling of economic phenomena and processes based on certain theoretical concepts. Thus, on the basis of ex post analysis, it can be stated that the national income is distributed between consumption and accumulation, for example, in a ratio of 1:1 or 3:1. Whether such a proportion corresponds to the conditions of balanced growth in the absence of opportunistic unemployment becomes clear in the course of the ex ante analysis.
In this way, macroeconomics - a branch of economic science that studies the behavior of the economy as a whole in terms of ensuring conditions for sustainable economic growth, full employment of resources, minimizing inflation and balance of payments.
Economic growth is the result of relatively stable factors such as population growth and technological progress. The dynamics of these factors in the long term determines the dynamics of potential output. In the short run, the economy deviates from this main trajectory of steady forward motion. Therefore, ensuring sustainable economic growth involves managing these cyclical fluctuations.
Management of the economic cycle in order to ensure full employment of resources and non-inflationary economic growth is carried out with the help of macroeconomic policy instruments: fiscal (or fiscal) and monetary (or monetary). Fiscal policy (including foreign trade policy) is carried out primarily by the government, and monetary policy is carried out primarily by the Central (National) Bank. The coordination of short-term and long-term goals, the choice of instruments and the development of alternative strategies for fiscal and monetary policy are a direct object of study in macroeconomic theory.
Focusing on the most significant economic factors, which determine the fiscal and monetary policy of the state (for example, such as the dynamics of investments, the state of the state budget and balance of payments, the level of wages, prices, the exchange rate, etc.), macroeconomics leaves behind the scenes the behavior of individual economic agents - households and firms. Macroeconomic analysis involves abstracting from the differences between individual markets and identifying key aspects of the functioning of an integral economic system in the interaction of markets for goods, labor and money as such, as well as national economies as a whole. We are talking about mechanisms for establishing and maintaining short-term and long-term general macroeconomic equilibrium (internal and external) with the help of fiscal and monetary policy measures.
At present, the widest sections of the population are interested in macroeconomic categories and indicators. Current incomes of people directly depend on the level of national income and employment. The value of family property is directly related to the rate of inflation. The state of a country's balance of payments largely determines the degree of freedom of movement of its inhabitants across state borders.
From economic theory, as well as from other sciences, they expect not only to explain the essence of the phenomena under study and forecast their development, but also to identify the ability of people to influence the course of events. For example, the outcomes of elections to representative and executive bodies of power depend to a decisive extent on the current values of macroeconomic indicators. Therefore, economic theory in general, and macroeconomics in particular, has an active influence on economic policy government.
The specificity of the subject of macroeconomics naturally determines the methodological and methodological features of macroeconomic analysis.
Introduction
Topic 1 National economy and its most important indicators
1. The subject and goals of macroeconomics
2. Model of the circulation of products and income
3. Macroeconomic indicators in the system of national accounts
Topic 2 Macroeconomic Equilibrium: Aggregate Demand and Aggregate
sentence
1. Aggregate demand and aggregate supply. Non-price factors
aggregate demand and aggregate supply
2. Macroeconomic equilibrium in the AD =AS model
Topic 3 Classical and Keynesian models of macroeconomic
equilibrium
Classical model of macroeconomic equilibrium
Keynesian model of macroeconomic equilibrium
Topic 4 Consumption, savings and investment. Multiplier theory Consumption and savings. Average and marginal propensity to
consumption and saving
Investments and their functional role. Equity savings and
investment as a basis for balanced growth
The theory of the multiplier. The Paradox of Thrift
Topic 5 Monetary Policy: Objectives and Instruments
Goals and objectives of monetary policy. Money instruments
credit policy
Politics of expensive and cheap money
Topic 6 Fiscal (fiscal) policy
The essence of fiscal policy, its goals, methods and tools
government spending multiplier. Tax multiplier
Discretionary and non-discretionary fiscal policy. Embedded
stabilizers
Topic 7 Macroeconomic regulation of the economy
Comparative characteristics of Keynesian and monetarist
Approaches to the issue of macroeconomic regulation of the economy
Macroeconomic regulation from the standpoint of supporters of the theory
rational expectations
INTRODUCTION
Economics is both cognitive activity and the system of economic knowledge. Economic theory as an independent discipline is studied in educational institutions Russia for several years. The situation in Russia is generated, on the one hand, by the inherited past, and, on the other hand, by market reforms. Without understanding the ongoing economic phenomena, without imagining their consequences, managers at various levels are not able to make rational decisions. Over the past period, a large number of translated foreign and domestic educational literature. Until recently, the textbooks of the majority of Russian authors were authorized translations of American textbooks on economic theory, which means that they did not fully reflect the course of market reforms being carried out in Russia.
The purpose of teaching macroeconomics is to familiarize students of economic specialties with the behavior of the economy as a whole in terms of ensuring conditions for economic growth, full employment and non-inflationary economic development.
The main tasks of studying the discipline:
mastering the theoretical foundations in accordance with the course program;
study of the basic principles of modern methods of macroeconomic regulation.
This lecture notes do not claim to be comprehensive coverage of the material, since the number of hours allotted for the study of macroeconomics is limited. The main attention is focused on the most important problems, the fundamental topics of the course.
Lecture notes are auxiliary literature and are focused on highlighting issues curriculum. At the same time, each student of the discipline should keep in mind that the full development of the discipline is possible only with a systematic study of the literature, a list of which is given at the end of each topic.
When compiling the lecture notes on macroeconomics offered to the attention of students of the Faculty of Economics, an attempt was made to facilitate the study of the foundations of modern economic science and solve the following tasks:
1) to help teachers conduct lecture courses and monitor students' assimilation of educational material;
2) to help students in mastering knowledge in the field of macroeconomic theory;
3) help students in organizing their independent creative work.
Topic 1. National economy and its most important indicators
Main questions of the topic
1. The subject and goals of macroeconomics.
2. Model of circulation of products and income.
3. Macroeconomic indicators in the system of national accounts.
1. Macroeconomics - a special section of economic theory, which is a continuation of microeconomics and studies the functioning of the economy as a whole. The goals of macroeconomics in most countries are: maintaining full employment of resources, price stability, sustainable economic growth and minimizing inflation.
Macroeconomic analysis involves abstracting from the differences between individual markets and industries, clarifying the mechanism of the functioning of the economic system as a whole by maintaining macroeconomic equilibrium. This is the difference between macroeconomics and microeconomics. However, macro- and microeconomic processes are closely interrelated. Macroeconomic decisions affect the economic development of firms through savings, consumer spending, investment, etc.
2. The macroeconomic analysis is based on the simplest model of the circulation of products and income, the main links of which are firms and households. (See fig. 1). Households offer land, labor, capital, and entrepreneurial skills as resources to firms to meet their needs. Firms use resources to produce goods and services. The emerging relationships are carried out in natural-material and monetary forms and are endlessly repeated. (The first is shown in the figure counterclockwise, the second - clockwise). The main provision of the model of circulation of products and income is the equality of the sum of sales of firms and the sum of household incomes. Thus, incomes earned in the economy are correlated with output and the level of gross domestic product.
Fig.1. Economic turnover model
The presented model characterizes a closed economy, in which there is no government intervention and links with the outside world. The integration of the national economy into the world economy, calculated by means of such indicators as the share of exports in production, the share of imports in consumption, the share of foreign investment, etc., shows the degree of its openness. The highest degree of openness (50 - 70%) in such countries as Austria, Belgium, the Netherlands. In France, Germany, Italy, the degree of openness is within 40 - 50%, in the USA, China, and India it does not exceed 20%.
3. The System of National Accounts is a record of economic activity that generates income for a nation.
The main indicator of the results of economic activity is gross domestic product (GDP), which includes the total value of final goods and services produced in an economy over a given period of time, usually a year. To calculate GDP, the market value of final products is used to avoid repetition and exclude intermediate products. end products- this is the product that goes directly to consumption and is not used in the production of other goods and services.
The calculation of GDP is carried out in three ways: by expenses, by income and by value added (production method).
Calculating GDP through spending consists of goods and services purchased by economic agents. In fact, it is the monetary value of all products purchased in society.
GNP=C+I+G+X n, where
C- personal consumption expenditures, including current consumption of all goods and services and consumption of durable goods and services;
I- gross domestic investment;
G- government purchases, for example, for the construction and maintenance of the army, educational institutions, etc. This does not include government transfers;
X n - net exports of goods and services abroad, calculated as the difference between exports and imports.
The GDP equation is called the basic macroeconomic identity.
When calculating GDP by income all types of income from both employment and property are summed up - wages, rent, interest, profits, as well as two elements of GDP that are not income: depreciation and indirect taxes on business.
When calculating GDP through production the contributions of all producers are summed up. Value added is defined as the difference between the value of the products produced by the firm and the value of raw materials and materials purchased from suppliers. This method allows you to take into account the contribution of various firms to the creation of GDP. In this case, the sum of all value added should be equal to the value of goods and services produced.
Nominal GDP is calculated in current year prices, real GDP in basic, constant prices, excluding inflation.
Real GDP is one of the main indicators of the state of the economy over a long period. The value of real GDP is influenced by the resources used - labor, capital and technological growth.
The ratio of nominal GDP to real GDP gives the concept of an indicator called the GDP deflator. GDP deflator measures inflation and is the most widely used price increase index. There is also an index consumer prices(CPI) and Producer Price Index (PPI).
The CPI is based on a market basket of goods and services. The CPI formula is as follows:
|
Consumer index price= |
Market basket price in a given year |
|
Price of the market basket in the base year |
Producer price indices are based on a market basket of wholesale sales.
Gross domestic product (GDP) takes into account all products manufactured on the territory of the country, excluding foreign branches and branches of firms. GDP is a measure of production in a country.
The system of national accounts includes such indicators as: gross national income(GDP + balance of primary income from abroad); net national income(GNI minus depreciation charges).
The national economy also serves to provide the country's population with income. Personal income represents income actually received and is calculated by subtracting social security contributions, corporate retained earnings, corporate income taxes, and adding transfer payments from national income.
personal disposable income calculated as personal income minus individual taxes of citizens. Personally disposable income is used for consumption and savings.
Gross disposable income(GNI + net transfers from abroad).
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Macroeconomics - a section of general economic theory that examines the fundamental problems of the economy at the level of the national economy as a whole. The term "macroeconomics" was introduced into circulation relatively recently, but macroeconomic analysis itself arose almost simultaneously with economic science. In essence, already in the "Economic Table" F. Quesnay a macroeconomic model of economic life is presented. Elements of macroeconomic analysis are also found among representatives of English classical political economy. He used the macroeconomic approach very widely in his theory. K. Marx. And only the neoclassicals, with their methodological individualism, veered towards microeconomic analysis. In the XX century. In the development of the macroeconomic direction of research, an outstanding role was played by J. Keynes. In fact, macroeconomics as an independent scientific discipline was formed after the publication in 1936 of the book by J. Keynes " General theory employment, interest and money."
In it, the author developed a whole system of concepts and categories new to economic science and used them as tools for functional macroeconomic analysis, which are currently used by scientists of all schools and areas of economic theory. Not even by accident M. Friedman, one of the active opponents of Keynesian theory, the head of modern monetarism, argued that all economists of today are Keynesians. However, even those who do not consider themselves as such admit that thanks to the work of J. Keynes they have become competent economists.
There is no insurmountable chasm between macroeconomics and microeconomics. And this is also the merit of J. Keynes. All macroeconomic analysis rests on a microeconomic basis - on the laws of supply and demand and on theories of economic equilibrium.
Differences in tasks, goals and tools of analysis are significant, and they must be seen and understood.
1. In the course of microeconomics at the center of the study are the simplest realities of economic life: individual consumers, households, manufacturing firms. The object of analysis is the markets for certain goods, the supply and demand for them, as well as the resource markets interacting with the markets for consumer goods and services.
Before macroeconomics there are other tasks. She explores general economic processes in general, i.e. market conditions and results all subjects economic relations. To maintain a balance between them, a special subject is needed - state. Therefore, in macroeconomics the most important economic agent the state becomes the presence of which, although microeconomics assumes, is far from being in the first roles.
Economic phenomena are considered by macroeconomics in their totality. But as a result of joint actions of participants in economic relations, results appear that can have both positive and negative consequences for the system as a whole and for its individual agents. In this case, state intervention in economic relations is intended to correct them in a certain way. Government actions aimed at stabilizing and developing economic relations are called economic policy .
The state establishes the "rules of the game" in the national market: it determines the tax policy, tariff rates, quotas, subsidies, as well as the laws according to which the participants in economic relations act. The state, represented by the government, acts as one of the subjects of the market, i.e., an active party defending national interests.
A schematic diagram of the interaction of economic agents in the national economy with the participation of the state is shown in fig. 1-2.
2. In microeconomics, only the real sector of the national economy is considered. Macroeconomic analysis proceeds from the existence of "credit money" in the country. The processes of their interaction form the monetary (monetary) sector. The interaction of the real and monetary sectors is the main problem studied by macroeconomics.
3. The subject of macroeconomics- patterns of functioning of the national economy. Macroeconomics analyzes the interaction, mutual influence of the most important segments of the national economy: labor markets, money, capital, goods and services, natural resources.
In general, in the subject of macroeconomics, there are three components:
National economy;
State economic policy and regulation;
Interaction of national economies within the world economy.
The main three problems that macroeconomics studies are:
Unemployment (employment)
Inflation (prices)
The economic growth.
At the same time, the subject of macroeconomic analysis is expanding. This also begins to include the problem of external economic equilibrium, reflected in the balance of payments.
Macroeconomics- This is a section of economic theory that studies the patterns of functioning of the economy as a whole.
The subject of macroeconomics are economic processes occurring on the scale of the national economy . The key problems of macroeconomic analysis include: determining the volume national production, the reasons for the existence of unemployment, the nature of economic cycles, the factors and mechanism of economic growth, the causes and conditions for the development of inflation, the influence of external economic factors on the state of the national economy.
Macroeconomics uses aggregation principle , according to which individual economic agents or processes are combined according to certain qualitative characteristics into aggregates (aggregates) and are considered as a single whole.
From a macroeconomic point of view, only four macroeconomic entity :
ü households (consumer sector);
firms (entrepreneurial sector);
ü Government (public sector)
ü abroad (foreign economic sector).
households show demand for goods and services and at the same time are suppliers of economic resources. They receive income from factors that together form the national income. Part of the income is spent on consumption (consumer spending), while the rest goes to savings.
Firms demand for resources by offering goods and services in turn. In addition, they invest and influence the amount of capital in society.
State performs a regulatory function and influences the decisions of households, firms and the functioning of markets (receives taxes, pays subsidies, carries out government loans and public procurement).
Abroad- all economic entities interacting with the national economy through the channels of international trade and capital flows.
All subjects of macroeconomics are interconnected by a system of national markets, including: the market for goods, the market for factors of production, the financial and money markets. The actions of subjects of macroeconomics determine the condition of macroeconomic equilibrium.
In macroeconomics, they operate with the concepts of "stocks" and "flows". stock - this is a certain value that can be quantified at a given point in time and characterizes the state of the object (capital stock, money supply in circulation, the number of unemployed). Flow - this is a value that can be determined for a certain period of time and characterizes the "flow" of processes. (national income, volume of investments).
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Macroeconomics- section of economic theory, student of economics in general, at the level of aggregate indicators. For example, if in the study of microeconomics we talked about the costs of acquiring goods and services by an individual or an individual firm, then in this section we will consider the total costs (aggregate demand) of society. This also applies to aggregate supply, the general price level, unemployment, etc.
Macroeconomics studies and government economic policy, and therefore often faces regulatory problems: what should the government do to prevent inflation, unemployment, loss of competitiveness of domestic goods, etc.
Macroeconomics- a relatively young science and its very name appeared only in the middle of the 20th century. According to most economists, we owe its emergence, first of all, to J. M. Keynes whose work "The General Theory of Employment, Interest and Money"(1936) made a real revolution in the ideas of scientists about the stability of the market system as a whole and the need for government intervention in the economy.
Features of macroeconomic analysis:
1. The main parameters of the national economy are quantifiable. Therefore, macroeconomic models take the form mathematical equations. In these equations, 2 types of variables are used (exogenous - come into the model from the outside, endogenous - are born inside the model itself).
2. All macroeconomic indicators have a high degree aggregation.
3. Unlike microeconomics, where there are two participants in the transaction, join another state and abroad. There is a significant complication of the macroeconomic model.
4. Macroeconomic models are balanced character. It is assumed that in all markets the equality of production and sales volumes, income and expenses, aggregate demand and aggregate supply is ensured.
5. Macroeconomics uses both static and dynamic models. The static model captures the economic process at the beginning and end. For a dynamic model, time is a decisive factor, and the main purpose is to show the process of transition of the national economy from one state to another.
Macroeconomics also uses other variables: stock and flow, stock - quantity measured at a given point in time, flow - quantity per unit of time.
6. One of the main premises of the macroeconomic model is flexibility or inflexibility of prices in the economy.
7. The main task macroeconomic analysis is analysis of the main macroeconomic parameters: employment, aggregate demand, aggregate supply, national income, inflation, economic growth and the business cycle.
49. Gross national product (GNP) and its modified version - gross domestic product (GDP) as the main indicators for measuring national production.
When assessing the functioning of the economy, it becomes necessary to use special indicators that summarize (aggregate) economic activity all subjects of the economy.
Gross national product is the total gross national output of final goods and services expressed in current prices.
Or, in other words, the total value of all final goods and services produced by the factors of production of a given country, both within its borders and in other countries.
In the definition of GNP:
1) cumulative- when calculating GNP, they summarize data on the production of all types of goods and services in all areas
GNP = Qa+Qb+…Qn.
2) national- accounting is carried out on a national basis: products created by factors of production that belong to the citizens of a given country are taken into account, regardless of the location of these factors.
3) final- intermediate products that are fully used in the production of final goods and services are not included in GNP.
4) current prices- all components of GNP are expressed in prices at which they can be purchased in the current period
GNP = Qa*Pa+Qb*Pb+…Qn*Pn.
From this follow 2 points:
1) in the economy, not just the quantity of goods and services is summed up, but their value.
2) when calculating GNP, current prices are used, which are not stable, hence the distortion of the results.
For the purity of calculations, the so-called nominal GNP and real GNP.
1. GNP calculated at current prices - nominal:
GNP = Qa 03 *Pa 03 +Qb 03 *Pb 03 +…
2. The dynamics of production in its pure form reflects real GNP. In it, the cost of goods and services is measured in constant (constant) prices of the base year.
GNP = Qa 03 *Pa 00 +Qb 03 *Pb 00 +…
GNP deflation– downward change in the monetary volume of GNP.
GNP deflator (IDP) is the ratio of nominal GNP to real GNP.
IDP = Nominal GNP / Real GNP
Nominal GNP is calculated taking into account changes in prices during the year and reflects both the growth in the physical volume of production and the growth in prices.
Real GNP is calculated at constant prices of the base year and reflects only the growth in the physical volume of production.
The specific indicator is GDP (modified GNP). GDP is the result of the production and economic activity of residents (citizens residing in the territory of a given country, with the exception of foreigners residing for less than one year) during the year.
Gross domestic product- is the total value of all final goods and services produced in a given country, or, in other words, within the geographic boundaries of a given country during the year.
Thus, GDP, unlike GNP, is calculated not according to the national, but according to the territorial principle.
Principles of approaches to measuring the volumes of national production. Methods for calculating GNP (GDP).
Nominal GNP is determined in three ways:
1. Flow by consumption method (end-use method)
2. Income stream method
3. Production method (value added method)
Cost stream method.
It is based on the principle of equality of the value of a product produced in society in the sum of all expenses for its acquisition.
GNP = C+I+G+X
C- consumption expenditures of households (for different kinds goods and services).
I- investment costs - the cost of investment goods (equipment, industrial buildings, inventories, housing construction, depreciation costs).
G- government spending directly on the production of goods and services,
do not include transfers and are valued not at market value, but at costs.
X- net exports, as the difference between the volume of exports and imports.
income stream method.
This method is fundamentally based on the assumption that the national product is equal to the national income.
national income- the amount of income that the three main subjects of the economy receive.
Income in this case, they represent a payment in one form or another for the use of factors of production and resources with which the final product is produced.
Y=W+R+i+p
W- wages - wages of workers and employees, including additional payments for social security, social insurance, payments from private pension funds.
R- rental income, income from the lease of land or buildings.
i- interest as income from money capital saved by households.
p- profits received by owners of sole proprietorships, partnerships (non-corporate profits) and corporations (dividends + retained earnings).
To obtain the most accurate GNP value and calculate according to the second method, we must take into account (add):
A) depreciation deductions of enterprises
B) indirect taxes
An error of 1% is allowed.
production method.
The value added in the production of goods and services is summed up, then the difference between the firm's revenue and production costs is found.
Added value- this is the market price of the firm's products, minus the cost of raw materials consumed and materials purchased from suppliers.
By summing the value added produced by all firms in a country, one can determine the GDP, which represents the market value of all goods and services produced.
Accounting features:
1. In real macroeconomic statistics, it is impossible to take into account absolutely all types of goods and services produced, especially in the household sector.
2. Operations related to production are subject to accounting. Resale transactions of final goods and securities are not included.
3. It is not customary to take into account the operations of the shadow economy.