5Consumption - C Durable goods: goods that last a relatively long time Nondurable goods: goods which are perishableServices: goods which do not involve the production of physical things
6Investment - INonresidential: expenditures by firms on machines, factories, tools, etc.Residential: expenditures by households on new houses and apartment buildingsBusiness inventories: goods that firms produce now with the intent to sell later
7Government Purchases - G Expenditures by federal, state and local governments on final goodsDoes not include transfer payments (social security, unemployment benefits, etc.)
8Net Exports - (EX-IM)Exports: sales to foreigners of U.S. produced goodsImports: purchases by U.S. citizens of foreign produced goodsNet Exports = Exports - Imports
9Income ApproachA method of computing GDP that measures the incomes - wages, rents, interest, and profits - received by all factors of production in producing final goods.
10National IncomeCompensation of employees: wages, salaries, etc., paid to householdsProprietors’ income: income of unincorporated businessesCorporate profits: income of corporationsNet interest: interest paid by businessesRental income: income received by property owners
11DepreciationDepreciation is the decline in value of capital assets as they wear out or become obsolete.
12Indirect Taxes and Subsidies Indirect Taxes: sales taxes, custom duties, license fees, etc.Subsidies: payments made by the government for which it receives goods or services
13Net Factor Payments to Rest of World Payments of factor income to the rest of the world minus the receipt of factor income from the rest of the world
14Gross National Product Add to GDP any income earned abroad by US firms or residentsSubtract any income earned in the US by foreign firms or residents.
15Net National Product - NNP NNP = GDP - depreciation