Economic Performance- Part Dos. GNP When economists measure income, they use Gross National Product...
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Transcript of Economic Performance- Part Dos. GNP When economists measure income, they use Gross National Product...
![Page 1: Economic Performance- Part Dos. GNP When economists measure income, they use Gross National Product GNP- the dollar value of all final goods, services,](https://reader035.fdocuments.in/reader035/viewer/2022062318/551a3f0a5503463e778b4e89/html5/thumbnails/1.jpg)
Economic Performance- Part Dos
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GNP
• When economists measure income, they use Gross National Product
• GNP- the dollar value of all final goods, services, & structures produced in 1 year with labor & property supplied by a country’s residents
• Its based on GDP, but it has differences
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• GDP only measures final goods & services produced in the US
• GNP measures the income of all Americans, regardless of where the goods & services originate
• To go from GDP to GNP, you must add all payments Americans receive from outside the US, then subtract all payments made to foreign owned resources
• GNP is smaller, because the US pays out more income for production to the rest of the world, than it receives
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• 5 income measures are included in the National Income & Product Accounts
• GNP is first• 2nd is the Net National
Product or GNP less depreciation- represents capital equipment that has worn out or become obsolete over the year
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• The 3rd is national income- the income left after all taxes (except corporate profits tax) are subtracted from NNP
• Ex. (know 2) excise taxes, property taxes, licensing fees, general sales taxes & customs duties
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• 4th is Personal Income- total amount of income going to consumers BEFORE individual income taxes are subtracted
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• 5th is Disposable Personal Income- total income the consumer sector has at its disposal AFTER personal income taxes
• Reflects the actual amount of money consumers can spend
• This is the money you receive from employers after taxes
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Economic Sectors• Its useful to think of the
economy as being made up of several parts (sectors)
• These sectors receive various parts of national income and use it to purchase total output
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Consumer (Private) Sector• Largest sector in macro economy• Its basic unit, the household, is made up of all
people who occupy a living space• Not necessarily family, households demand
durable goods • Consumers receive income from disposable
personal income
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Investment (Business) Sector• Made up of proprietorships,
partnerships, and corporations• Responsible for bringing the factors of
production together to produce output
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Government (Public) Sector• Includes all local,
state, & federal levels of govt
• Receives income from indirect business taxes, corporate income taxes, Social Security contributions, and personal income taxes
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Foreign Sector• Includes all consumers
& producers outside the US
• Represents the difference between the dollar value of goods sent abroad and the dollar value of goods purchased abroad