National Income Flashcards
Expenditure Approach
adds up all the money households and firms spend in the economy on final goods and services
Income Approach
adds up all the income the factors of production in an economy receive during a specific period
Output/Production Approach
the combined value of the new and final output produced in all sectors of the economy
GDP at market prices
This means GDP has values measured at the final prices of goods and services
GDP at factor costs
GDP measured at the cost of production (+indirect taxes and -subsidies)
GDP at current prices
no allowance has been made for the effects of inflation
GDP at constant prices
the final figure has been adjusted for the effects of inflation
Net property income from abroad
money coming into the local economy (+to value of local production)
Net property income sent abroad
money made by foreigners in the local economy and sent abroad (-from the value of local production)
Income approach calculation
national income+depreciation=GNP
GNP+net factor payment to rest of the world= GDP at factor cost
GDP at factor cost+taxes-subsidies= GDP at market price
GDP
Gross Domestic Product is the value of final goods and services produced within a country in a given year
National Income calculations
GDP at factor cost-Net property income from abroad=GNP
GNP-Capital consumption
