Gross Domestic Product (GDP) measures the total market value of all final goods and services produced by a country's residents, regardless of location.
False
Arrange the following income accounts from highest to lowest based on their typical values in a country:
1️⃣ GNP
2️⃣ GDP
3️⃣ NI
4️⃣ PI
5️⃣ DI
What does national income accounting measure?
Economic activity of a country
Disposable Income (DI) is the income households have available to spend or save after paying taxes
What are the three main aspects of economic performance measured by national income accounting?
Production, income, consumption
National income accounting provides key insights for policymakers to assess the economic health of a nation.
True
National income refers to the total income earned by a country's residents from producing goods and services.
True
What is the primary purpose of national income accounting?
Measure overall economic activity
What does national income measure?
Total income earned by residents
What is disposable income?
Income available after taxes
What does GDP measure in national income accounting?
Market value within borders
What does national income measure in national income accounting?
Total income earned by residents
What does disposable income measure in national income accounting?
Income after taxes
What is the formula for calculating GDP using the expenditure approach?
GDP=C+I+G+(X−M)
What does government purchases include in the expenditure approach?
Government spending on goods
What is one purpose of national income accounting?
Assess economic health
What does GNP measure in national income accounting?
Final goods by residents
Gross National Product (GNP) measures the value of goods and services produced by a country's residents worldwide.
True
Arrange the following income measures from broadest to narrowest:
1️⃣ GNP
2️⃣ GDP
3️⃣ NNP
4️⃣ DI
'I' in the expenditure approach formula stands for business spending on capital goods.
True
In the income approach formula, GDP includes compensation of employees, net business income, net interest, rental income, and indirect business taxes
Match the component of the income approach with its description:
Compensation of Employees ↔️ Wages and salaries
Net Business Income ↔️ Business profits
Net Interest ↔️ Interest earned minus paid
Rental Income ↔️ Income from property
What type of income contributes to a country's GNP but not necessarily its GDP?
Income from abroad
What does national income accounting measure?
Economic activity
What is the primary purpose of national income accounting?
Measure economic activity
National Income (NI) measures the total income earned by a country's residents from producing goods and services.
The purpose of national income accounting is to measure a country's overall economic activity and health.
What does national income accounting quantify to assess economic health?
Production, income, consumption
What is subtracted from GNP to calculate Net National Product (NNP)?
Depreciation
The expenditure approach to calculating GDP includes Consumption (C), Investment (I), Government Purchases (G), and Net Exports.
The income approach to calculating GDP sums up all the income earned by individuals and businesses within a country's borders.
What does the income approach to calculating GDP sum up?
Income earned within borders
Match the GDP and GNP with their scope:
GDP ↔️ Production within borders
GNP ↔️ Production by residents worldwide
NNP equals GNP minus depreciation
True
National income accounting provides a complete and accurate picture of a country's true economic state
False
What does Gross National Product (GNP) measure?
Goods by country's residents
National income accounting is essential for understanding a country's economic health and identifying areas for policy improvement.
True
In EconLand, the National Income (NI) is $900 billion
GNP measures the market value of final goods and services produced by a country's residents
Disposable income is the income available to households after paying taxes