National income, consumption, and savings Flashcards
Considers the income from different sectors of the economy.
Income Approach
Is the difference of payments received from foreigners and payments made to foreigners for the use of factors of production.
net foreign factor income
GDP = Y= C + I + G + NX = AE
Expenditure Approach / Aggregate expenditure
GDP = Total Income + Business cash flow
GDP Income Approach
GDP + Net Foreign Factor Income
GNI
-GDP= (Wages+ Rent+ Interest+ Profit) + (Indirect business taxes- Subsidies+ Depreciation)
Expanded GDP Income Approach
Considers the value added in each stage of the production process, which is computed as the difference of production inputs and the price of output
Production Approach/Value-Added Approach
National income represents the total income derived from total output or aggregate expenditure, which corresponds to the total expenses associated with production
AD Curve
Accounts for the return on the factors of production
Total National Income
Is plotted in the x-axis and is represented by real GDP and is denoted by Y
Actual Expenditure
Is plotted on the y-axis and is represented by aggregate expenditure and is denoted by AE
Planned Expenditure
Determines the equilibrium level of real GDP by the point where the total or aggregate expenditures in the economy are equal to the amount of output produced
Keynesian Cross Diagram
The level of consumption that is independent of income
Autonomous Consumption
Refers to consumption that is driven by income
Induced Consumption
Is an economic formula that measures the relationship between income and total consumption of goods and services in the economy
Consumption Function
