NATIONAL INCOME Flashcards by Jane Suminguit

the value of the goods and
services produced within the country.

GDP

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In equilibrium, the
amount of output produced equals

amount demanded

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Measures total income of everyone in the
economy.

gdp

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Also measures total expenditure on the
economy’s output of goods and services.

gdp

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Also measures ___ on the
economy’s output of goods and services.

total expenditure

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Because every _____
is a peso of income for the seller.

peso a buyer spends

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output is defined in two ways

production side and demand side

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payments to workers in wages,
capital in interest and dividends

production side output

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purchases by different sectors of the economy

demand side output

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production side of output

payment to workers in wages capital interest and dividends

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demand side of output

purchases by diff sector of the economy

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A mathematical expression that shows the relationship of
inputs (land, labor, capital) and outputs (goods or services).

Output = f(land, labor, capital)

production function

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what is the production function

Output = f(land, labor, capital)

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own the factors of production,
sell/rent them to firms for income
▪ buy and consume goods & services

households

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buy/hire factors of production,
use them to produce goods
and services
▪ sell goods & services

firms

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households do savings to financial market
household do taxation in government
household do import spending on foreign sector

leakages

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financial market invest to firms
government spending on firms
foreign sector export earnings to firms

injections

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two types of circular flow diagram

simple circular flow d and 5 sector circular flow d

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…the market value of all final goods &
services produced within a country
in a given period of time.

gdp

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…the ____ of all final goods &
services produced within a country
in a given period of time.

market value

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goods are valued at their ___

market value so
all goods are measured in the same unit
things that dont have market value are excluded

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…the market value of all ___ goods &
services produced within a country
in a given period of time.

final

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intended for the end user

final goods

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used as components
or ingredients in the production of other goods

intermediate goods

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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.)