ECO 3341 Lecture Notes - Net National Product, Gross National Product, Gini Coefficient
Document Summary
Incomes approach is the sum of incomes generated by production with two small adjustments. = the wages and salaries + corporate profits + proprietor s income + interest + rents + (depreciation + indirect business taxes). Proprietors income= examples include income of a legal practice, therapist, etc. Tax has to be paid by the seller. Payment of the tax come out of the output. Measuring inequality: the lorenz curve and the gini index. The nipa accounts tell us nothing about how income is distributed. High per capita means heavily concentrated in the pockets of a small plutocratic class. Look at the median household income rather than the mean household income. Median household income is not an indicator of how equally or unequally income is distributed among members of society. How do we measure inequality: the lorenz curve, gini index (gini coefficient) Gini index is an index that measures the degree of inequality.
