National Income – USA v NZ

A government measures a country’s total output to assess the performance of the country. An economy is usually considered to be doing well if its output is growing at a sustained and sustainable rate. Economic growth has the potential to increase people’s living standards. If an economy is growing at a slower rate than it is considered capable of, a government is likely to introduce policy measures to stimulate the economy.

National income statistics are used to compare countries’ economic performance and to give a perspective to key economic indicators. For instance:

• 2018 the value of output of New Zealand US$280 billion

• 2019 the value of output of New Zealand increased to US$295 billion

• 2018 the value of output of USA US$19.52 trillion

• 2019 the value of output of USA increased to US$20.58 trillion

The US had a greater absolute increase in output but a smaller percentage increase than New Zealand as it was starting from a larger base (US$19.52 trillion compared with US$280 billion). See mindmap below with measures/characteristics of National Income.

GROSS DOMESTIC PRODUCT (GDP) Under new definitions introduced in the late 1990s, Gross Domestic Product is also known as Gross Value Added. It is defined as the value of output produced within the domestic boundaries of the NZ over a given period of time, usually a year. It includes the output of foreign owned firms that are located in NZ, such as the majority of Trading Banks in the market – ASB, National, ANZ etc. It does not include output of NZ firms that are located abroad.

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