1. Value-Added Approach adds up production across producers
Q: How do we measure GDP in Reality? A: There are three equivalent approaches
Value-Added Approach adds up production across producers
Income account adds up claims against value added across types of claimant
Expenditure Account
adds up uses of product by type of use

3. Factors of Production
factors of production (capital and labor) help interpret the national accounts
preliminaries
stocks vs. flows
location of factors
factors in the income accounts
factors in the expenditure accounts
private vs. public sectors
factors and value-added are connected through the production function

4. Private vs. Public: Principles and Measurement
principle: add private factors with public factors
practice: public investment rarely measured separately from public consumption
principle: add public sector value-added to private sector value-added
practice: public sector output not sold in the marketplace, so net value-added is assumed to be equal to public sector labor costs. It is impossible to measure aggregate public sector productivity
principle: add private factor incomes with public factor incomes
practice: public capital is not rented in a marketplace, so net public capital income is assumed to be zero
practice: public sector output cannot be classified as final versus intermediate  need to adjust the income accounts for “indirect taxes”

5. Government Spending Compared with Public Sector NIPA Entries
government spending = government purchases + transfers, only purchases included as public entry in the NIPA expenditure account
government purchases = purchases of items from private enterprises + purchases of factors used by public institutions and enterprises, but only the later are included as public entry in the NIPA value-added account