GDP Equations - Lecture notes 11rview of various aspects instructors should consider when designing online courses. PDF

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This course provides on overview of various aspects instructors should consider when designing online courses.rview of various aspects instructors should consider when designing online courses....

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GDP Equations National Income and Product Accounts: GDP = C + I + G + (X – M) GNP = GDP + NFIA NNP = GNP – CCA NI = NNP – SD PI = NI +

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Income received but not earned (dividends, government transfer payments, personal interest income) Income earned but not received (corporate profits, social insurance contributions, net interest, indirect business taxes)

DPI = PI – Personal taxes (NFIA = receipts of factor income from the rest of the world - payments of factor income to the rest of the world.) Ways of measuring GDP: 1. GDP as the value of final output: GDP = Σ (Pi x Qi) 2. GDP as expenditures: GDP = C + I + G + (X – M) 3. GDP as the sources of income: GDP = w + i + R + profit – NFIA +CCA + SD 4. GDP as the uses of income: GDP = DC + S + T + M

Measuring GDP as expenditures is equivalent to measuring GDP as the sources of income: For any firm, profit = sales – costs For all firms producing final goods and services in the economy, gross profit = gross sales – gross costs

or

gross sales = gross costs + gross profits

so

GDP as expenditures = resource costs + other costs + profit

C + I + G + (X – M) =

w + i + R - NFIA + CCA + SD

so

+ profit so

GDP as expenditures =

GDP as the sources of income

Measuring National Income using the income approach: GDP = w + i + R + profit – NFIA + CCA + SD Since GNP = GDP + NFIA then GNP = w + i + R + profit – NFIA + CCA + SD + NFIA = w + i + R + profit + CCA + SD since NNP = GNP – CCA then NNP = w + i + R + profit + CCA + SD – CCA = w + i + R + profit + SD Since NI = NNP – SD NI = w + i + R + profit + SD – SD = w + i + R + profit

then

National income is equal to the sum of factor payments in the economy, National income = wages + interest + rents + profits...