National Income Accounting

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What is the formula to calculate National Income (NI) and what are the components that make up NI?

NI = W + R + i + PR, where W is wages, R is rental income, i is interest income, and PR is business profits.

How is Gross Domestic Product (GDP) calculated using National Income (NI) and other components?

GDP = NI + Indirect Business Taxes + Depreciation

What is the key difference between Gross Domestic Product (GDP) and Gross National Product (GNP)?

GDP measures output produced within a nation, while GNP measures output produced by domestic factors of production, including those located abroad.

What is Net Foreign Factor Income (NFP) and how is it related to GDP and GNP?

NFP is the net factor payments from abroad, and GDP = GNP - NFP. Signup and view all the answers

What are the components of Net Exports, and how do they relate to GDP?

Net Exports = Exports - Imports, and it is a component of GDP. Signup and view all the answers

What is the difference between domestically owned factors of production located abroad and foreign factors of production located domestically?

Domestically owned factors of production located abroad earn income that is included in GNP but not GDP, while foreign factors of production located domestically earn income that is included in GDP but not GNP. Signup and view all the answers

What is the formula to calculate GDP using the expenditure approach?

Y=C+I+G+X-M Signup and view all the answers

What is the difference between GNP and GDP?

GNP - Net Factor Payments (NFP) = GDP Signup and view all the answers

What is Net Foreign Factor Income (NFFI)?

Income paid to domestic factors of production by the rest of the world minus income paid to foreign factors of production by domestic economy Signup and view all the answers

What is Private Disposable Income?

Y + NFP + TR + INT - T Signup and view all the answers

What is the relationship between Private Disposable Income and Government Net Income?

Private Disposable Income + Government Net Income = GDP + NFP Signup and view all the answers

What is the formula to calculate Net National Product (NNP)?

Gross National Product (GNP) - Depreciation Signup and view all the answers

What is the formula to calculate GDP using the expenditures approach, and what do each of the components represent?

GDP = C + G + I + (X - M), where C represents Household Consumption, G represents Government Spending, I represents Gross Private Investment, and (X - M) represents Net Exports. Signup and view all the answers

Using the data from Table 1, calculate the GDP using the expenditures approach.

GDP = $304 + $156 + $124 + $18 = $602. Signup and view all the answers

What are the four components of GDP when calculating it using the income approach?

The four components are Wages (w), Rent (r), Interest (i), and Profits (p). Signup and view all the answers

What is the difference between GDP and GNP, and how are they related to Net Exports and Foreign Factor Income?

GDP measures the value of goods and services produced within a country, while GNP measures the value of goods and services produced by a country's citizens. Net Exports (X - M) and Foreign Factor Income are components of GNP, but not GDP. Signup and view all the answers

What are the factors of production, and how are they related to the income approach to calculating GDP?

The factors of production are Labor, Capital, and Land. The income approach to calculating GDP accounts for the income earned by these factors, such as Wages (Labor), Rent (Land), and Interest (Capital). Signup and view all the answers

What is the significance of Net Exports in calculating GDP, and how is it related to Foreign Factor Income?

Net Exports (X - M) represents the value of goods and services exported minus the value of goods and services imported. It is a component of GDP and is related to Foreign Factor Income, which represents income earned by citizens abroad. Signup and view all the answers