ECON 2 Chapter Notes - Chapter 10: Gdp Deflator, Net National Product, Transfer Payment
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ECON 2 Full Course Notes
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For an economy as a whole, income must equal expenditure. Economy"s income is the same as its expenditure because every transaction has two parties: a buyer and a seller. Measured as total income or total expenditure circular flow diagram. Households buy goods and services from firms, these expenditures flow through the markets for goods and service. Every dollar spent by a buyer of a good or service becomes a dollar of income to the seller of that good or service. Government adds up total income in the economy. Difference between the two calculations of gdp is called the statistical discrepancy. Gross national product (gnp) is the total income earned by a nation"s permanent residents (called nationals) Includes income that our citizens earn abroad and excludes income that foreigners earn here. Net national product (nnp) is the total income of a nation"s residents (gnp) minus losses from depreciation.