ECON332 Chapter Notes - Chapter 2: International Monetary Fund, Dont, Net National Product
Document Summary
National income accounting records the value of national income that results from production and expenditure. Producers earn income from buyers who spend money on goods and services. The amount of expenditure by buyers = the amount of income for sellers. National income is often defined to be the income earned by a nation"s factors of production. Gross national product (gnp) is the value of all final goods (not intermediate) and services produced by a nation"s (not foreign) factors of production and sold on the market in a given time period. The value of final goods and services produced by us owned factors of production are counted as us gnp. Factors that are used to produce goods and services: workers (labor services), physical capital (like factories, buildings, and equipment), natural resources and others. Workers earn wages, physical capital earns interest, natural resources (land) earns rent, and entrepreneurship earns profit. Entrepreneurship is the factor that organizes the other 4 factors.