Macroeconomics Worksheet: National Income Accounting
2.5
SUMMARY Gross Domestic Product (GDP)
National Income Accounting A set of rules and definitions for measuring aggregate economic activity. The technique used to measure the overall production of the economy and other related variables for the country as a whole.
Measures the total market value of final goods and services produced in an economy in a one year period within a geographic boundary. Regardless of the individual or firm’s nationality.
Gross Nationality Product (GNP)
Net Factor Income from Abroad
Measures the total market value of final goods and services produced of citizens and firms of a country in a one-year period. Includes only value of production for citizens and domestic firms generated outside of the country.
The difference between the two measures corresponds to the net income earned by foreigners. Net Factor Income from Abroad; national factor income earned working in a foreign country less/minus foreign factor income earned working within a country.
National Income
Personal Income
The sum total of all factor income earned by residents of a country; in the form of wages, rent, interest and profit in an accounting year. The market value of all the goods and services produced in a country, in a particular period of time.
The total the income actually received by persons from all sources in the form of current transfer payments and factor income.
Disposable Personal Income The income remaining with individuals after deduction of all taxes levied against their income and their property by the government.
Per Capita Income
Real Income
Derived from dividing national income from the total population of the country.
The national income expressed in terms of a general level of prices of a particular year, considered as the base year.
Market Price vs. Factor Cost Market Price (MP) The actual market prices paid by consumers; includes indirect taxes.
(+) Subsidies (-) Indirect Taxes
(+) Indirect Taxes (-) Subsidies
Factor Cost (FC) The real price that is earned by sellers; includes subsidies.
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