chapter 6.1 part 6 Flashcards
How do we calculate net national product (NNP)?
By taking GNP and then subtracting the value of how much physical capital is worn out, or reduced in value because of aging over the course of a year.
What is depreciation?
The process by which capital ages and loses value.
What can we further subdivide NNP into?
National income and personal income.
What is national income?
All income to businesses and individuals.
What is personal income?
Only income to people.
What is gross national income (GNI)?
The value of all goods and services produced by people from a country whether in the country or not.
How is GNI unlike other methods?
It measures the wealth of a nation because it focuses on income not output.
How does GNI relate to the discussion of global economic diversity?
The World Bank now uses GNI to classify nations according to economic status.
