PART 1.2 ECO DEV

• The value that the measures of national income and output assign to a good

  or service is its _____.

  MARKET VALUE
• the price it fetches when bought or sold.

  MARKET VALLUE
• THREE STRATEGIES HAVE BEEN USED TO

  OBTAIN THE MARKET VALUES OF ALL THE

  GOODS AND SERVICES PRODUCED:

  the product (or output) method, the expenditure method, and the income method.
• looks at the economy on an industry-by-industry basis.

  product method
• The total output of the economy is EQUAL TO?

  the sum of

  the outputs of every industry.
• However, since an output of one industry may be used by another

  industry and become part of the output of that second industry, to avoid counting the item twice we use

  not the value output by each industry, but the

  value-added
• The total value produced by the economy is the sum of the _______ by every industry.

  values-added
• is based on the idea that all products are bought by somebody or some

  organiZation.

  expenditure method
• This amount must equal the value of everything produced.

  expenditure method
• works by summing the incomes of all producers within the boundary.

  income method
• the total value of a good is included several times in national output, by counting it

  repeatedly in severalstages of production.

  DOUBLE COUNTING
• Key formulas in METHODS OF MEASURING NATIONAL INCOME:

  GDP (gross domestic product) at market price

  GDP at factor cost

  NDP at factor cost
• GDP (gross domestic product) at market price

  value of output in an economy in the particular year minus intermediate consumption
• GDP at market price minus depreciation plus NFIA (net

  factor income from abroad) minus net indirect taxes (GNP)

  GDP at factor cost
• Compensation of employees plus net interest plus rental

  & royalty income plus profit of incorporated and unincorporated NDP at factor

  NDP at factor cost
• Indicators of development

  per capita income

  life expectancy

  education

  extent of poverty
• is the commonest indicator of material standards of living, and hence is

  included in the index of development.

  GDP per capita
• It is found by measuring Gross Domestic Product in a year, and dividing

  it by the population.

  GDP per capita
• Example of Direct TAX

  Property Tax, Corporate TAX, iNCOME TAX
• Examples of INdirect TAX

  Value added Tax, service tax, sales tax
• The _______ focuses on finding the total output of a nation by directly

  finding the total value of all goods and services a nation produces.

  output approach