Aggregate Accounting - Aggregate accounting (or national income accounting) is a set of rules and definitions for Measuring economic activity in the aggregate economy – that is, in the economy. - Aggregate accounting is a way of measuring total, or aggregate production - Gross domestic product is the total value of all final goods and services produced in an Economy in a one-year period Calculating GDP - Calculating GDP requires adding together millions of different services and products - All the quantities of goods and services produced are multiplied by their market price per Unit to determine a value measure of the good or service. - This is weighting the importance of each good by its price The Components of GDP - GDP is divides into four expenditure categories - Consumption is spending by households on goods and services - Investment is spending for the purpose of additional production - Government spending is goods and services that the government buys - Net exports is spending on exports minus spending on imports - Since production is categorized into one of these four divisions, by adding up these four Categories, we get total production of U.S goods and services