ECON 102 Chapter Notes - Chapter 3: Tax Wedge, Retained Earnings, Seasonal Adjustment
Document Summary
Other income indicators: the national income statements contain other income metrics that vary marginally in importance from gdp. From national income to personal income, a number of reforms carry us the sum of money that families and non-corporate companies receive. First, we reduce national income by the amount companies earn but don"t pay out, either because businesses retain profits or pay government taxes. Subtracting corporate income (which is equivalent to sums of corporate taxes, dividends, and retained earnings) and returning dividends would make this move. Second, we boost national income by the net sum paid out in tax payments by the government. This change is equal to government grants to individuals minus government paid social security premiums. Thirdly, we adjust national income to include household interest rather than corporate interest. Seasonal cycle and seasonal adjustment: economists are interested in studying quarter-to-quarter fluctuations in these factors, considering that real gdp and other income indicators reflect how well the economy is doing.
