Eco Notes 2 Unit 2

Eco Notes 2 Unit 2 1/28/15

Expenditure approach ( C+ Ig+ G+ Xn = GDP) adding up the market value of all domestic expenditures made on all final goods and services in a single year

Income Approach (GDP= W+ R+ I+ P+ Statistical Adjustments) adding up all the income earned by households and firms in a single year

                W- Wages ex. compensation of employees, or salaries

                R- Rents ex. 2 ways: from tenant to landlord or from lease payments that corporations pay for the use of space

                In- Interests ex. Money paid by private businesses to the suppliers of loans used to purchase capital

                P- Profit (proprietor’s income) ex. 3 ways to see word profit: corporate income taxes, dividends, undistributed corporate profits

Budget- government purchases of goods and services + government transfer payments – government tax and fee collections. If number is positive= budget deficit    number is negative= budget surplus

Trade- exports – imports

GNP= GDP + net foreign factor income use expenditure approach GDP

Net National Product (NNP) = GNP – Depreciation

Net Domestic Product (NDP) = GDP – depreciation

National income= GDP- indirect business taxes – depreciation – net foreign factor payment  or compensation of employees + rental income + interest income + proprietor’s income + corporate profits

Disposable Personal income (DPI) = national income – personal household taxes + government transfer payments