NATIONAL INCOME Flashcards
the value of the goods and
services produced within the country.
GDP
In equilibrium, the
amount of output produced equals
amount demanded
Measures total income of everyone in the
economy.
gdp
Also measures total expenditure on the
economy’s output of goods and services.
gdp
Also measures ___ on the
economy’s output of goods and services.
total expenditure
Because every _____
is a peso of income for the seller.
peso a buyer spends
output is defined in two ways
production side and demand side
payments to workers in wages,
capital in interest and dividends
production side output
purchases by different sectors of the economy
demand side output
production side of output
payment to workers in wages capital interest and dividends
demand side of output
purchases by diff sector of the economy
A mathematical expression that shows the relationship of
inputs (land, labor, capital) and outputs (goods or services).
Output = f(land, labor, capital)
production function
what is the production function
Output = f(land, labor, capital)
own the factors of production,
sell/rent them to firms for income
▪ buy and consume goods & services
households
buy/hire factors of production,
use them to produce goods
and services
▪ sell goods & services
firms
households do savings to financial market
household do taxation in government
household do import spending on foreign sector
leakages
financial market invest to firms
government spending on firms
foreign sector export earnings to firms
injections
two types of circular flow diagram
simple circular flow d and 5 sector circular flow d
…the market value of all final goods &
services produced within a country
in a given period of time.
gdp
…the ____ of all final goods &
services produced within a country
in a given period of time.
market value
goods are valued at their ___
market value so
all goods are measured in the same unit
things that dont have market value are excluded
…the market value of all ___ goods &
services produced within a country
in a given period of time.
final
intended for the end user
final goods
used as components
or ingredients in the production of other goods
intermediate goods
GDP only includes ____ – they already
embody the value of the intermediate goods
used in their production.
final goods
…the market value of all final ____ & _____ produced within a country
in a given period of time.
final goods and services
gdp includes tangible goods and intangible services
true
GDP includes currently produced goods,
not goods produced in the past.
true DAPAT CURRENTLY PRODUCED ANG PAST WA NAY APIL
GDP measures the value of production that occurs
within a country’s borders, whether done by its
own citizens or by foreigners located there.
true so tanan produced within the country balag dli pa filipino / foreigners ang gabuhat ana
Usually a year or a quarter (3 months)
true usually a yr or 3 months daw ang gdp
GDP is total spending.
true
four components of gdp
consumption
investment
govn purchases
net export
consumption pinaka taas
% sa pie chart
what is the fundamental national income identity
Y = C + I + G + NX
Total spending by households on goods and
services
CONSUMPTION
For renters, C includes rent payments.
For homeowners, C includes the imputed
rental value of the house, but not the
purchase price or mortgage payments
Not included in C: purchases of new housing
Total spending on goods that will be used in the
future to produce more goods
INVESTMENT
Business capital: business structures, equipment, and
intellectual property products
Residential capital: landlord’s apartment building; a
homeowner’s personal residence
Inventory accumulations: goods produced but not yet sold
“Investment” does not mean the purchase of financial
assets like stocks and bonds.
TRUE
All spending on the goods and services
purchased by the government
GOVERNMENT PURCHASES
transfer payments is not included in government purchases such as Social Security or unemployment
insurance benefits because transfer payment are not purchases of goods and services
true
represent foreign spending on the
economy’s g&s.
export
foreign buys from us, kitay mamaligya (ipagawaas)
outflowed money
leakages/outflows
while firm earns money kay injections
if export is higher
trade surplus
import higher
trade deficit
more income than spends
budget surplus
expenses > income = budget deficit
a statistical framework of the economy’s production, expenditures and income, and records the annual flow of goods and services in the economy during a
given time period.
national income account
provides information on the performance of the
economy using the following macroeconomic indicators:
Gross National Product (GNP), Gross Domestic Product
(GDP), National Income (NI), Personal Income (PI), and
Personal Disposable Income (DI) to describe the state of
the economy.
national income account
provides information on the performance of the
economy using the following macroeconomic indicators to describe the state of economy
national income account
Gross National Product (GNP), Gross Domestic Product
(GDP), National Income (NI), Personal Income (PI), and
Personal Disposable Income (DI)
macroeconomic indicators
the total market value of all final goods and services
produced within a given period by factors of production
owned by a country’s citizens, regardless of where the
output is produced.
gnp = gdp + net primary income
measures the difference between the earnings of Phil.
residents in other countries and the earnings of foreigners
in the Philippines.
Net Factor Income (Payments from) Abroad/ Net Primary
Income
Accounts the value of
all final goods and
services within a
county given a period
of time.
gross domestic product
Adding factor
payments include
receipts from abroad
made to GDP
GNP = GDP + Net
Factor Payments from
abroad
gross national product
Total amount of
money earned by a
nation’s people and
businesses; same with GNP
but this involves
accounting indirect
business taxes
gross national income
3 approaches in computing gnp
expenditure approach, income approach, value-added by industry origin
refers to expenditure of households on durable and non durable goods and services
personal consumption expenditure
durable and non durab;e
includes expenditures on construction of residential and non residential buildings, plants, equipment, machineries
gross private domestic investment
what is left when allowance for depreciation is deducted from gross private domestic investment
net private domestic investment
gross private domestic investment - allowance for depreciation
purchases of goods for social services such as on education, health, defense, transportation, roads and bridges
government expenditures
difference between the value of goods and services sold to other country (export) and import, value of goods and services bought from a foreign country (export - import)
net export
value of goods and services sold to other country
export
value of goods and services bought from a foreign country
import
The total income
earned by households and includes
income from abroad. This includes
Rent (for land), Salaries/ Wages (for
labor), Interest (for capital), and
Proprietor’s Income and Corporate
Income (for entrepreneurship).
factor income
the aggregate or total earnings of the
factors of production as a result of the productive
activities during the given period.
national income
the market value of new goods
that are produced during the given period after deducting
that part of the current output that are used to replace
the worn-out capital goods.
net national product
the payment for the use land, buildings,
equipment and other properties.
rent income
received as compensation by employees/
workers.
salaries
the earnings from deposits and on bonds and
other securities and credit instruments.
interest
refers to the earnings from the
business of sole proprietor or entrepreneur.
proprietor’s income
part of the corporate income/ profit that is
distributed to stockholders, as their share in the profit of
the corporation.
dividends
part of the
income of the corporation that is retained and not
distributed to the stockholders. It may be used for
expansion and business development.
Undistributed Corporate Income/ profit:
Gross Income that accrues to the
household coming from factor payments.
personal income
Non-labor income transferred from
government to household. Example: 4Ps, pension
transfer payments
This is the total income left
to households after deducting taxes and other personal
charges and adding transfer payments. This is also known
as after-tax-income.
Personal Disposable Income:
This is
the allowance for the wear and tear of durable assets.
This is added because it is part of income deducted in
calculating profit.
Depreciation/ Capital Consumption Allowance:
Taxes levied on business. E.g.
license fees, sales tax, custom duties.
Indirect Business Tax:
the main indicator of the
average person’s standard of living.
real gdp per capita
measures how much output on income was
produced or received on the average by an individual in an
economy.
GDP per capita
GDP is not a perfect measure of well-being.
true according to robert kennedy
GDP Does Not Value:
the quality of the environment
leisure time
non-market activity, such as the child care
a parent provides his or her child at home
an equitable distribution of income
Then Why Do We Care About GDP?
Having a large GDP enables a country to afford
better schools, a cleaner environment,
health care, etc.
Many indicators of the quality of life are
positively correlated with GDP.
For example: education (education, human
development, employment rate, inflation, and
etc.)
