ABSTRACT
This chapter provides a map of the whole economy as a snapshot taken by an accountant. It discusses an explanation of the main flows of money and goods or services between business, households, the government, and foreign countries; and a description of the components of gross domestic product (GDP) and national income. Labor income is divided into wages, salaries, and benefits. Property income is divided into profits, rent, and interest. The chapter explains GDP and its four components. The components of spending for GDP are consumer, investor, government, and foreign spending. The Department of Commerce uses the term expenditure, instead of the more common word spending, to describe payments made for goods or services, but either word may be used. All spending can be viewed as a mighty river coming from four different tributaries: consumer spending, investment spending, government spending, and foreign spending.
