GDP accounting has three methods, namely, the production method, income method, expenditure method, three methods from different perspectives to reflect the results of the production activities of the national economy, theoretically the three methods of accounting results are the same, the three methods corresponding to the formula is as follows:
1, the production method
GDP = Compensation of laborers + net production tax + depreciation of fixed assets + operating surplus
The first item is the compensation of laborers. It refers to all the remuneration received by laborers for engaging in production activities. Including the various forms of wages, bonuses and allowances received by the workers, both in monetary form and in kind; also includes the workers enjoy the public health care and medicine and health costs, transportation subsidies and social insurance premiums paid by the unit.
The second item is the net production tax, which refers to the balance of the production tax minus the production allowance. Production tax refers to various taxes, surcharges and planning fees levied by the government on production units for producing, selling and engaging in business activities, as well as for the use of certain factors of production (e.g., fixed assets, land and labor) for engaging in production activities. Production subsidies, in contrast to production taxes, are unilateral revenue transfers from the government to production units, and are therefore considered negative production taxes, including policy loss subsidies, price subsidies in the food system, and export tax rebates for foreign trade enterprises.
The third item is depreciation of fixed assets, which refers to the depreciation of fixed assets extracted in accordance with the approved depreciation rate of fixed assets in order to make up for the depletion of fixed assets in a certain period. It reflects the transfer value of fixed assets in the current period of production.
The fourth item is the operating surplus, which refers to the balance of the value added created by the resident unit after deducting labor remuneration, net production tax and depreciation of fixed assets. It corresponds to the operating profit of the enterprise plus the production subsidy.
2. Income Method
GDP = Wages + Interest + Profit + Rent + Indirect Taxes and Corporate Transfers + Depreciation
It can also be viewed as GDP = Income from Factors of Production + Income from Unproduced Factors
The income method of accounting for the GDP is from the point of view of income, by summing up the factors of production in production GDP is calculated by adding the various incomes received by the factors of production from the point of view of incomes, i.e., by adding the wages received by labor, the rent received by landowners, the interest received by capital, and the profits received by entrepreneurs.This method is also known as the factor-payment method and the factor-cost method.
3. Expenditure Method
GDP = C + I + G + (X-M)
1) Consumption of the population (denoted by the letter C), which includes expenditures on the purchase of consumer durables, such as refrigerators, color TVs, washing machines, and automobiles, and expenditures on non-durable consumer goods, such as clothing and food, as well as expenditures on medical care, travel, and haircuts. labor services. Expenditures on the construction of dwellings are not considered consumption.
②Business investment (indicated by the letter I), is the expenditure on adding or renewing capital assets (including plant, machinery and equipment, dwellings and inventory). Investment includes two categories: investment in fixed assets and investment in inventories. Investment in fixed assets refers to investment in new plant, purchase of new equipment, and construction of new dwellings. Why is residential construction considered investment and not consumption? Because dwellings, like other fixed assets, are used for a long time and slowly consumed. Inventory investment is an increase or decrease in the inventory (or what becomes inventory) held by a business. If the national business inventory at the beginning of the year is $200 billion and at the end of the year is $220 billion, then inventory investment is $20 billion. Inventory investment may be positive or negative because the value of inventory at the end of the year may be greater or less than inventory at the beginning of the year. Business inventory is considered an investment because it generates income. From the point of view of national economic statistics, products that are produced but not sold can only be treated as investment in the inventory of the enterprise, so that GDP statistics from the production point of view and GDP statistics from the point of view of expenditure are consistent.
Investment included in GDP is gross investment, which is the sum of replacement investment and net investment, and replacement investment is also known as depreciation.
The division between investment and consumption is not absolute; the exact classification depends on what is specified in the actual statistics.
3) Government purchases (denoted by the letter G) refers to expenditures by all levels of government for the purchase of goods and services, which include government expenditures for the purchase of arms, services of the army and the police, office supplies and office facilities for government offices, the organization of public **** works such as roads, and the opening of schools, among other things. Salaries paid by the government to government employees are also government purchases. Government purchases are substantial expenditures that show a two-way movement of goods, services and money, which directly creates social demand and becomes a component of the gross domestic product (GDP). Government purchases are only one part of government spending, and the other part of government spending, such as government transfers and interest on the public debt, is not included in GDP.Government transfers are expenditures made by the government that are not in return for goods and services produced during the year, including government expenditures on social welfare, social insurance, unemployment relief, poverty benefits, old age security, health care, and subsidies to agriculture. Government transfer payment is the government through its functions to transfer and redistribute income among different members of society, transferring the income of one part of the population to another part of the population, in essence, a kind of wealth redistribution. When there are government transfer payments occur, that is, when the government pays these expenditures, it does not receive any goods and services accordingly; government transfer payments are a kind of monetary expenditures, and the total income of the whole society does not change. Therefore, government transfers are not included in GDP.
4 Net exports (denoted by the letters X-M, with X denoting exports and M denoting imports) is the difference between imports and exports. Imports should be subtracted from the country's total purchases because they indicate a flow of income from abroad and, at the same time, are not expenditures for the purchase of domestic products; exports should be added to the country's total purchases because they indicate an inflow of income from foreign countries and are expenditures for the purchase of domestic products, and, therefore, net exports should be counted as part of total expenditures. Net exports may be positive or negative.
II. CPI formulaCPI = (value of a group of fixed commodities at current prices minus the value of a group of fixed commodities at base-period prices divided by the value of a group of fixed commodities at base-period prices) x 100. Fixed weights are used to calculate the formula for the Weighted Arithmetic Average Index (WAAI),
CPI indicates that for an average household's expenditures, the purchase of a representative group of goods, how much more it costs today than at some time in the past. For example, if the average household in a country spent 1,000 yuan per month on a group of goods in 1995, and 1,100 yuan on that group of goods in 2000, the country's consumer price index for 2000 would be
(with 1995 as the base period) CPI= 1100-1000/ 1000*100%=10%, indicating that prices this year have risen by 10% over last year
If the CPI described above is used to measure the price level, the inflation rate is the percentage change in the CPI from one period to the next.
For example, if an economy's consumer price index increased from 100 last year to 112 this year, then the inflation rate for that period is T=(112-100)/100×100%=12%, which means the inflation rate is 12%, which is expressed as a 12% increase in prices.
The current CPI index for China is calculated based on the previous year as the base period (100), not a certain point in history as the base period.
Note:GDP is the abbreviation of Gross Domestic Product (GDP=Gross Domestic Product), which refers to the market value of all final goods and services produced by all resident units of a country or region during a certain period of time.GDP is the core indicator of national economic accounting, and an important indicator of the overall economic condition of a country or region.
CPI stands for Consumer Price Index. CPI is a macroeconomic indicator that reflects changes in the price level of consumer goods generally purchased by households. It is a measure of the price level of a representative group of consumer goods and services over time and changes in the relative number, is used to reflect the price level of consumer goods and services purchased by households changes.