UNIT 2
-Economist elect statistics on production, income, investment savings called National Income Accounting
-The most important measure of growth is GDP
-Gross = total salary
-GDP = total $ value of all final goods and services produced within a country's borders within a given year
-GNP = total value of all final goods and services by citizens of that country on its land or foreign land
What is not included in GDP?
*Intermediate Goods - no multiple counting (battery, metal tires)
- only count final goods (cars)
*Secondhand or Used Goods
*Non-market Activity - Illegal Drugs
- Babysitting
- Volunteering
*Financial Transactions - stocks
- bonds
- real estate
*Gift/Transfer Payments - social security
- scholarships
- transcripts
What is counted in GDP?
*C - Consumption - 67% of the economy (all finished goods and services)
*Ig- Gross Private Domestic Investment - New factory equipment
- New construction
- Factory services
- Gross domestic private investment
*G - Government Spending -government purchases on goods and services
*Xn - Net Exports (Export -Import)
Expenditure Approach - add up all domestic expenditure made in all final goods & services in a year
C + I + G + Xn = GDP
Income Approach - add up all income of household and firms earned in a year
W + R + I + P + Stats Adjusted
( wages) (Rents) (Interest) (Profit)
Wages -compensation of employee
-salary supplements
(ex. pension, health, insurance, welfare)
Rent - tenets to landlords
- lease payment by a corporation for the use of their space
Interest - money paid by private business to the suppliers of loans used to purchase capital
Profit - corporate income taxes (proprietors income)
- dividend
- undistributed corporate profits
You should add the formulas to finding the inflation rate, and the unemployment notes we took last week.
ReplyDeleteSomething you could add to this section is that, GDP is wayyyy more reliable than GNP is, because GDP uses proof of your receipts to see what you've bought or sold. It's solid evidence and can be accounted for and recorded.
ReplyDeleteGNP is harder to calculate, because it receives what YOU support. Because it is based on what you tell them, there's no way of knowing if you're lying or telling the truth.
That's why GDP is more reliable.
Hope this helped. xD
report* not support.
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