ABSTRACT
Macroeconomic theory focuses on the determinants of the level of economic activity. National income accounting concerns the measurement of economic activity. Modern national income accounting is a complex and sophisticated branch of macroeconomics. This chapter focuses on a closed economy that does no exporting and lending to, or importing and borrowing from, the rest of the world, and also on an open economy to include such transactions with the rest of the world. It discusses the output-income, income-expenditure, and investment-saving identities of the macroeconomic theory. The Macroeconomic theory also deals with stocks: variables that are measured in $ or constant $ at some point in time, without any time unit. In accounting terms, stocks are recorded on the balance sheet of a business enterprise or household. In a closed economy, the balance sheets of all the accounting units must be consistent with one another, forming a network of interlocking balance sheets, because one unit's liability is another unit's asset.
