Final Expenditure Approach

Final Expenditure Approach

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  9 de brito– Group 3 Gallentes, De Jesus, Sanchez, Cane, Santiago, Maranan, Colindres, Deomampo, Malate, Roble, Romo
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  Final Expenditure Approach • The Economic sectors like household, government, business firms, and foreign market have their own expenses, which are significant in measuring the GNP 1) Government Expenditure (G) 2) Personal Expenditure (P) 3) Business Expenditure (B) 4) Net Export 5) Net Factor Income from Abroad (NFIA) 6) Statistical Discrepancy (SD) Page 1
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  1 GOVERNMENT expenditure • Government expenditure is a term used to describe money that a government spends. Expenditure occurs on every level of government, from local city councils to federal organizations. There are several different types of government expenditure, including the purchase and provision of goods and services, investments, and money transfers. Page 2
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  GOVERNMENT expenditure BACKPage 3
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  2 PERSONAL expenditure • Personal consumption expenditures (PCE) is the primary measure of consumer spending on goods and services in the U.S. economy. It accounts for about two-thirds of domestic final spending, and thus it is the primary engine that drives future economic growth.Thus, for example, it shows the portion of spending that is accounted for by discretionary items, such as motor vehicles, or the adjustments that consumers make to changes in prices, such as a sharp run-up in gasoline prices. Page 4
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  PERSONAL expenditure BACKPage 5
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  3 BUSINESS expenditure • Any expenses incurred in the ordinary course of business. Business expenses are deductible and are always netted against business income. Businessmen invest in fixed capitals like machineries, buildings, office equipment, changes in stocks and inventories. These are all considered as business expenditure. BACK Page 6
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  4 NET export • The exports and the imports are the main determinants of this component. • In order to determine the expenses incurred by the foreign sector, the expenses in the export (X) are deducted from the expenses in imports (M) • It will be positive if the exports are higher than the imports BACK Page 7
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  5 Net FactorIncome from Abroad (NFIA) • It shows the difference between the income of Filipino workers abroad as factors of production and the income of foreign working in our country as factors of production. •When the income of OFWs is higher than the foreign workers, there is a positive result. • If the foreign workers’ income is higher than the OFWs’, there is a negative result. BACK Page 8
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  6 STATISTICAL discrepancy(SD) •DISCREPANCY - a lack of compatibility or similarity between two or more facts. • The errors in measuring the GNP represents the component. • Any discrepancy that cannot be determined and the components traced will be considered as a discrepancy. Page 9
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  GNP= G +P + B + (X-M) + NFIA + SD • If all the expenditures mentioned above are put together, GNP will be computed. The formula above will be used for measuring the GNP. • For example: • G = 65 M pesos • P = 173 M pesos • B = 100 M pesos • M = 10 M pesos • X = 8 M pesos • NFIA = 6 M pesos • SD = 8 M pesos GNP = 65 + 173 + 100 + ( 8-10 ) + 6 + 8 = Php 350 million Page 10
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  Group Reaction &Reflection Page 11 We believe that learning about the expenditures in our economy is essential in our up-bringing as the youth of today and the nation of tomorrow. It teaches us that we need to be aware where our money is, and when to use it. In the future we can use this knowledge to benefit not only ourselves but the company and its workers and also we contribute in the Philippine’s economic development.