In order to perform macroeconomic analysis in support of economic policy, it is necessary to collect data over time on key economic variables related to income, employment of resources, price levels, and other indicators of the direction of the business cycle. This collection and analysis of data is called National Income Accounting and represents the tools and methods by which economists and policy-makers measure economic activity and economic growth over time.

2.0.1 Macroeconomic Variables

There are two types of economic variables used in our analysis: flow variables -- economic activity measured per unit of time and stock variables -- measures of economic activity at a point in time. For example:

Flow Variables:

• Income (Household, Per-Capita, National)
• Budget Deficits
• Investment Expenditure
• Consumption Expenditure
• Any Income Statement measures (Sales Revenue, Gross Profit, Expenses)

Stock Variables:

• Wealth (an accumulation of Savings over time)
• Debt (an accumulation of borrowing over time),
• Capital Stock (Factories, Machinery, Inventory, Infrastructure)
• The Money Supply
• Any Balance Sheet measures (Assets, Liabilities, Owner's Equity)

Typically most of the common, although not necessarily relevant, measures of economic activity are flow variables. It is important to note that in order to interpret the magnitude of any flow variable, a corresponding time period must be attached ( consumption spending per month, quarter, or year for example).