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Chapter 5

National Income Accounts data that show success/failure of economic system.
what the purpose of economic system? satisfaction happiness, measure output good & services.
How we measure all the goods and services we don't, me measure dollar value
How do we determine dollar value? worth whatever buyers & sellers agree of what is worth
GDP (Gross Domestic Product) monetary value of all final goods & services produces in a country in a year.
Formula of GDP C + I + F + G = GDP ($17.4 trillion)
C in GDP Consumer spending (70%)
I in GDP Investment (15%) -
F in GDP Foreign Trade (-5%) export = add (make it, but didn't buy so we need add in) import = subtract (bought them, but didn't make it so we subtract)
G in GDP Government (20%)
GDP (inside the US border) depreciation = NDP -capital consumption allownace
GNP (Gross National Product) (outside the US border)
National Income employee compensation (get paid doing work) proprietors income (SP & P/S) Gross corporate profits (increase) Rental Income Net Interest Indirect Business Taxes.
Disposal Income Spend & Save
Personal Income (Received) (-)Personal Income taxes (+)only want to count final products once in order to avoid double counting
VAT Value Added Taxes
What would you do with work done but not reported? legal - underground economy - barter economy (ex: trading) - illegal activities
Work done but no buyer or seller? (do yourself project) Ex: wash your car, cut your lawn, make own meal. doesn't get counted, volunteers, homemakers
Price level changes Q (quantity number) * P (price $) = GDP
Concept GDP more output, a bigger GDP is good (better)
Poke Hole Argument (GDP doesn't care) 1. GDP measure quantity, not quality 2. leisure time 3. more output may mean more pollution 4. Fair share 5. composition 6. ethics/morals 7. crime ^ 8. Measure success
Created by: 547250412094000



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