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Understanding National Accounts

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This manual explains what GDP and GNI and their components are and what they mean. It shows how they are used and what they are used for. And it does this in an easily understood way. Opening with a chapter showing how national accounts concepts relate to macroeconomics, the books goes on to systematically deal with volume and prices, international comparability, production, final uses, household accounts, business accounts, government accounts, and financial accounts. It also has chapter on how national accounts data are gathered and the history of the national accounts system. Three special chapters examine national accounts in China, India, and the United States. Previously published only in French, this manual has been revised and expanded to have a truly global perspective. 

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Distinguishing between volume and price increases

Everyone wants the maximum possible growth, although today that the preference is for “durable” or “sustainable” growth. The generic term “growth” indicates the overall change in the quantity of goods and services produced and made available to consumers and investors. The prime task of national accounts is to separate out, within the change in the observed monetary aggregates, the part of growth that stems from a change in quantities from the part that is due to a change in prices. An increase in quantities or, as the national accountants would say, in “volumes” is generally a good thing. A rise in prices, known as inflation, is not generally good news. A change in a monetary aggregate has accordingly very limited interest in the national accounts. However, it takes on economic significance when, to use the national accountants’ jargon, one carries out its “volume/price breakdown”. This is why this highly technical chapter comes first, even before those on output and final uses.

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