Review of Economic Sectors and National Income

These flashcards cover key concepts related to Gross Domestic Product, Gross National Product, economic sectors, and national income, aimed at enhancing understanding for the exam.

Fill in the blank with the component of GDP each of these items would fit into. 

A manager buying a new car. 

Consumer Spending 

What is Gross Domestic Product (GDP)?

GDP measures the total value of all goods and services produced within a country's borders in a given period.

What does GDP represent in relation to national income?

GDP represents the total national output of goods and services, while GDP also reflects the income generated from that output.

What is Gross National Product (GNP)?

GNP measures the total income earned by a country's residents, regardless of where that income is generated.

What is the main difference between GDP and GNP?

GDP accounts for output produced within a country's borders, while GNP accounts for the income generated by a country's residents, regardless of location.

Identify the sectors included in the macro-economy.

The macro-economy includes the consumer sector, investment sector, government sector, and net foreign sector.

What is the output-expenditure model formula?

The output-expenditure model states GDP = C + I + G + (X-M), where C is consumer spending, I is investment, G is government spending, and (X-M) is net exports.

What are the main sources of income for the government sector?

The government sector's income comes from taxes, including indirect business taxes, corporate income taxes, and individual income taxes.

How does the consumer sector contribute to the economy?

The consumer sector consists of individuals and households that drive demand for goods and services, facilitating production and income generation.

What is the role of net exports in GDP calculation?

Net exports, defined as exports minus imports (X-M), represent the contribution of foreign trade to a country's GDP.