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ECON 2 Lecture Notes - Lecture 4: Per Capita Income

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School
Irvine Valley College
Department
Economics
Course
ECON 2
Professor
colins

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Document Summary

The total money value of all final goods and services produced in a country during any given period of time usually one year. The total money value of all final goods and services produced from factors of production owned by a country"s nationals during any given period of time regardless of where they are located. Nnp = gnp depreciation (capital consumption allowance) This refers to the total amount of income earned by the factors of production in an economy during a certain period. it is computed thus; Ni = nnp (indirect taxes less subsidies) Refers to national income divided by the population of that particular country. Refers to the total income of persons or households from all sources before taxation; computed as; Pi = ni (retained corporate profits + social insurance payments) + (interest incomes received by households + transfer payments to households) Referred to as the after tax personal; incomes to households.

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Related Questions

The following data relates to the market value of economic transactions for the three main sectors of your countrys economy. SECTOR VALUE OF OUTPUT PURCHASES FROM OTHER FIRMS Agriculture 300 160 Manufacturing 200 150 Services 150 120 Required: (i) Compute the gross domestic product (GDP) and explain the method used and why. (2 Marks) (ii) Given that: depreciation = 90, indirect taxes = 70, subsidies = 30, payments to factors of production from abroad = 20, payments to foreign factors = 40. Compute: 1) Gross national product (GNP) at market prices. (1 Mark) 2) Net national product (NNP) at market prices. (1 Mark) 3) Net national product (NNP) at factor cost. (1 Mark) 4) Net domestic product (NDP) at factor cost (1 Mark)

The Gross National Product (GNP) of the United States is equal to

A. the value of the total income received by all of the residents of the United States.

B. the value of final goods and services produced within the United States.

C. the value of the total income received by all households in the United States, after taxes are paid.

D. the value of final goods and services produced by U.S. factors of production.

 

If a large amount of production within a country takes place at foreign-owned facilities, then it is likely that the country's GDP will be (larger than/smaller than) GNP.

Gross Domestic Product (GDP) only measures the value of marketed goods and services for a country during a given period of time.

Is the GDP measure underestimating or overestimating national production and total income in the economy? Why?

What are the limitations of the GDP in measuring total output and national welfare? What products (services) are excluded from the GDP computation?