The basic concepts of national income are explained, centered around the question of the measurement of the total output of heterogeneous goods in a capitalist economy, showing the effects of changes in the prices used to add up those goods. The capitalist economy consists of a private sector and a government sector. The balances between income and expenditure in these sectors are then linked to their supporting financial and non-financial balance sheets of assets and liabilities. The basic principles of stock-flow consistency between sectors of the economy are shown using sectoral balances.
Financial balance sheets by sector
