National Income and Flow-of-Funds Analysis

By John P. Powelson | Go to book overview
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Chapter 6
THE NATIONAL PRODUCT ACCOUNTS OF THE UNITED STATES

Gross national product in the United States was $440.3 billion1n in 1957. Add to this another $21.0 billion1k of imports, and the total goods and services available for Americans to consume, invest, or export, was $461.3 billion (not shown separately on Table 6-1). Well over half of this ($284.4 billion1g) was consumed by households. Government consumption ($85.7 billion1h) was a little less than one-fifth of GNP, and a little less than one-sixth of GNP plus imports. Domestic investment was $65.4 billion1i, which amounts to about 15% of GNP (or about 14% of GNP plus imports). Exports were $26.0 billion1i, or $5.0 billion more than imports. This $5.0 billion excess, minus $1.5 billion1f of cash donations by the U.S. government to foreign governments, leaves net foreign investment of $3.5 billion1l for the year.

Gross national product of $440.3 billion1n was, of course, associated with gross national income of $440.3 billion1m. By far the largest share of this--$326.8 billion1a, or about 74%--was paid to factors of production and became income of households. Even so, a sizable lump ($67.1 billion1c) was paid as transfers, of which almost all ($65.5 billion1d) went to the government in taxes. A small amount ($1.6 billion1e) was distributed to households as charity contributions or uncollectible sales accounts (bad debts). Finally, $46.3 billion1b of gross national income was set aside by business as undistributed profits and depreciation allowances, virtually all of which is intended for plant replacement and expansion. It is interesting to compare business saving ($46.3 billion1b) and domestic investment ($65.4 billion1i), and to note that about 71% of investment was financed by undistributed profits and depreciation allowances.

The primary distributions of income, outlined above, were not the final distributions. Business paid some taxes to the government, but part of the amounts paid to factors of production were also to be finally included in government revenues, through personal taxes. Likewise, some of the primary distributions to the government would ultimately be forwarded

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