ECON 104 Lecture Notes - Lecture 3: Income Approach, Investment Banking

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tealcrocodile688

25 Apr 2017

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Freakonomics book about investments and stuff, very good. Most information is available online at the national income and product accounts. Data collected and published by the government describing the various components of national product and income. Final goods and services goods and services produced for final use. Intermediate goods goods that are produced by one firm for use in futher processing by another firm. Value added the difference between the value of goods as they leave a stage of production and the cost of the goods as they entered that stage. So in a gdp, identify all the final products in an economy, then add them up. Ultimately there are two ways of calculating the gdp extremely important policy tool. Expenditure approach add up all expenditure to calculate gdp. Gist of the story is this you can either add up all the expenditures or you can add up all the income when calculating gdp.

Related Questions

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.

greenyak981

5. The income approach

The following table shows macroeconomic data for a hypothetical country. All figures are in billions of dollars.

	Billions of Dollars
Gross private investment (investment)	120
Capital consumption allowance (depreciation)	35
Exports	60
Imports	55
Government purchases	130
Personal consumption expenditures (consumption)	325
Indirect business taxes	20
Social insurance taxes	33
Corporate profit taxes	13
Undistributed corporate profits	4
Transfer payments	70
Personal taxes	90
Compensation of employees	380
Corporate profits	120
Rental income (of persons)	25
Net interest	40
Proprietors' income	5
Income earned from the rest of the world	90
Income earned by the rest of the world	45

National income can also be calculated based on disposable income. Use the following table to derive personal income and national income (in billions of dollars). Specify what needs to be added to disposable income to arrive at personal income, and explain how personal income should be adjusted to find national income.

	Billions of Dollars
Disposable income		500
Plus		+
Personal income		=
Plus social insurance taxes		+ 33
Plus		+
Plus undistributed corporate profits		+ 4
Minus		-
National income		=

National income is the total amount earned by the citizens of a country, while gross domestic product is the total value of goods and services produced within a country. To determine the gross domestic product, you have to make some adjustments to national income. Use the following table to derive gross domestic product and, as part of the process, net domestic product (NDP) (in billions of dollars). Again, specify what should be added to and subtracted from national income to arrive at the net domestic product, and what should be added to the net domestic product to arrive at the gross domestic product.

		Billions of Dollars
National income
Plus indirect business taxes		+ 20
Plus		+
Minus		-
Net domestic product (NDP)		=
Plus		+
Gross domestic product (GDP)		=

taupeweasel18

An improvement in technology causes the production possibilities frontier (PPF) to

	shift to the right.
	pivot upward.
	shift to the left.
	pivot downward.

(7)

Which of the following is not shown by the circular flow model?

	The flow of resources in one direction and money in the other
	The equality of aggregate spending and aggregate income
	The interaction of households, firms, and the government
	The total amount of goods and services the economy can produce

(8)

Gross domestic product (GDP) is defined as

	the market value of all final goods and services produced in an economy in a given period of time.
	the market value of all consumption goods and services produced in an economy in a given period of time.
	the market value of all investment goods and services produced in an economy in a given period of time.
	the real value of all investment goods and services produced in an economy in a given period of time.

(9)

Real GDP

	includes all domestic and foreign transactions.
	includes the dollar value of domestic transactions only.
	tries to isolate the effect of changing output, holding prices constant.
	measures GDP in terms of prices of goods and services produced.

(10)

When economists talk about economic growth, they are usually referring to

	the percentage change in nominal GDP.
	the percentage change in real GDP.
	the percentage change in nominal investment.
	the percentage change in real investment.

chocolateant769

ECON 104 Lecture Notes - Lecture 3: Income Approach, Investment Banking

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