Economic Performance

Question 0

NI

Answer 0

National income is the sum of income earned by factors of production.
Includes: wages, salaries, fringe benefits, rent, interned payments, profits on investment

Question 1

GDP

Answer 1

Gross domestic product measures total value of all final goods and services produced in a year. 
Does not include:
1)Intermediate goods
2)Repurchase 
3)Financial transactions 
4)Transfer payments 
5)Underground activity 

Changes in GDP are tricky. Make sure to account for other changes like war, disaster, ect

Question 2

PI

Answer 2

Personal income is the money income received by households before personal income taxes.

Question 3

DI

Answer 3

Disposable income is personal income minus taxes.

Question 4

Calculating GDP: expenditure approach

Answer 4

GDP= C+I+G+(X-M)

• C is consumption by households
• I is investment in new physical capital, new construction, and additions to business inventory
• G is government spending
• X is exports
• M is imports

Question 5

Calculating GDP: income approach

Answer 5

Expenditures on GDP ultimately become income. By adding depreciation to NI we get GDP. To get GDP:

• Add in corporate profits
• Subtract subsidy payments
• Add foreign workers income
• Subtract income of workers working abroad

GDP= NI + Depreciation- subsidies+ net income of foreigners

Question 6

NDP

Answer 6

Net Domestic Product is GDP minus depreciation. This indicates how much output is left for C and additions to capital stock after replacing the capital used in the production process