National Income & GDP Flashcards

Flashcards about National Income & GDP.

Gross Domestic Product (GDP)

The total market value of all final goods and services produced within a country during a specific period, using the factors of production located within that country.

Gross National Product (GNP)

The total value of all final goods and services produced within a given period by the factors of production owned by a country's citizens, regardless of where the production takes place.

Net National Product (NNP)

The total income of a nation's residents (GNP) minus depreciation, which refers to the wear and tear on the economy's capital goods like equipment and structures.

National Income (NI)

The total income earned by a nation's residents in the production of goods and services. It is calculated by subtracting indirect business taxes from NNP and adding business subsidies.

Personal Income (PI)

The income that households and non-corporate businesses receive. It excludes corporate retained earnings but includes interest income and government transfer payments.

Disposable Personal Income (DPI)

The income that households and non-corporate businesses have left after paying taxes and other non-tax payments to the government. It represents the amount available for spending and saving.

Importance of measuring National Income

Helps economists understand a country's economic growth, the business cycle phase it is in, changes in average living standards, and the distribution of income and wealth within the population.