Net Output and GDP
The total net output of resident producers in a national economy is equal to Gross Domestic Product or GDP. Included in this total is the productive activity of government agencies and certain income-generating activities of households.
- Usually the term "net output" is used to refer to the contribution which a particular economic sector (for example, agriculture, manufacturing, business services etc.) makes to total value added or GDP during a quarter or a year.
- The net output of a particular industry should not however be confused with the total value of its outputs, since in reality that total value includes the value-added by production plus the value of inputs used up (i.e. intermediate consumption) in producing the total value of outputs. For example, in making a car, a car factory adds value to the materials and components used to make the car. But the value of the finished car doesn't just include that value-added in production, but also the materials and ancillary operating costs used to make the car. Thus, if we want to know the total sale value of the output of the car factory, the relevant measure is not the "net output" (the value-added), but rather the gross output. If, for example, we wanted to calculate a "unit labour-cost" for the output value of the cars, the appropriate ratio is between labour costs and the gross output value of the cars. It follows that the total new net output value of a whole country, after deducting the value of goods and services used up from the gross expenditure or gross sales revenue, is a different concept from the net output of a particular industry.
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Famous quotes containing the words net and/or output:
“Afraid lest he be caught up in a net of words, tripped up, bewildered and so defeated—thrown aside—a man hesitates to write down his innermost convictions.”
—William Carlos Williams (1883–1963)
“Lizzie Borden took an axe
And gave her mother forty whacks;
When she saw what she had done,
She gave her father forty-one.”
—Anonymous. Late 19th century ballad.
The quatrain refers to the famous case of Lizzie Borden, tried for the murder of her father and stepmother on Aug. 4, 1892, in Fall River, Massachusetts. Though she was found innocent, there were many who contested the verdict, occasioning a prodigious output of articles and books, including, most recently, Frank Spiering’s Lizzie (1985)