Quarter-3_Week-2-and-3-Lesson 2

Araling Panlipunan 9: Pambansang Kita ng Bansa

Lessons Overview

  • Quarter 3, Weeks 2 and 3

  • Focus on national income and economic performance indicators.

Economic Performance

  • Key measure of a country's development.

  • Determined by how well all sectors of the economy perform their responsibilities.

Economic Indicators

  • Pambansang Kita (National Income)

  • Gross National Product (GNP) or Gross National Income (GNI)

  • Per Capita Income

  • Gross Domestic Product (GDP)

Gross National Income (GNI) and Gross National Product (GNP)

  • GNP: Market value of all products and services produced by a nation, plus income from abroad, within one year.

  • Also referred to as GNI.

Measurement of GNP/GNI

  • Uses market value of products and services.

  • Only includes final goods ready for consumption.

Market Value

  • Represents the monetary worth of products and services available in the market.

Goods Classification

  • Final Goods: Completed products that do not require further processing.

  • Intermediate Goods: Products that need to be processed further to become finished goods.

Types of GNP/GNI

  1. Nominal vs. Real GNP/GNI

  2. Potential vs. Actual GNP/GNI

Real GNP/GNI

  • Measured at constant prices based on a base year.

Nominal GNP/GNI

  • Actual measure based on current market prices.

  • Reflects economic changes and inflation.

Potential GNP/GNI

  • Estimated based on production capacity and factors of production.

Actual GNP/GNI

  • Represents total production after utilizing various production factors.

  • GNP/GNI gap: Difference between actual and potential GNP/GNI.

Positive Gap

  • Occurs when potential GNP/GNI exceeds actual GNP/GNI, indicating room for growth.

GNP/GNI vs. GDP

  • GNP/GNI includes products by the country's citizens both abroad and domestically.

  • GDP refers only to products and services produced within the country's borders, regardless of who produced them.

Calculation Methods for GNP/GNI

  1. Industrial Origin Approach (Value Added Approach)

  2. Final Expenditure Approach

  3. Factor Income Approach

1. Industrial Origin Approach

  • Measures contributions of each sector to the total value produced.

  • Total of all sector contributions yields the GDP.

2. Final Expenditure Approach

  • Total expenditures by various sectors are gauged to calculate GNP/GNI.

  • Divided based on types of expenditures: individuals, government, companies, foreign sector, and discrepancies.

Types of Expenditures

  • Personal Sector Expenditure: Expenses of employees, workers, and entrepreneurs.

  • Government Expenditure: Salaries of employees and infrastructure project costs.

  • Corporate Expenditure: Investments in fixed capital and employee salaries.

  • Foreign Sector Expenditure: Payments for imports and exports.

  • Net Primary Income from Abroad (NPIA): Income from Filipinos working abroad.

  • Statistical Discrepancy: Adjustments to account for computation errors.

3. Factor Income Approach

  • Assesses income from production factors to derive National Income (NI).

  • Components include:

    • Government Income (taxes, interest)

    • Entrepreneurial Income (profits)

    • Employee and Worker Income (salaries)

    • Corporate Income (earnings from produced goods)

  • NI formula: NI = KG + KEM + KK + CI + IBT.

  • Capital Consumption Allowance and Indirect Business Taxes included in GNP/GNI.

Limitations of GNP/GNI Calculation

  1. Excludes products/services without measurable value.

  2. Price measurements based solely on products for overall production accounting.

  3. Intermediate goods are not counted to prevent inflation in GNP/GNI.

  4. Undocumented economic activities (underground economy) are excluded.

Underground Economy

  • Refers to unreported economic activity.

Additional Considerations in GNP/GNI Calculation

  • Includes various factors such as market value and product types (final and intermediate).

National Income

  • Defined as total income received by all sectors of the economy, foundational for understanding per capita income.

Per Capita Income (PCI)

  • Represents income per person, assuming equitable distribution of national income among the population.

Income Distribution

  • The government aims to achieve equitable income distribution as mandated by the Constitution.

Lorenz Curve

  • Developed by statistician Max Otto Lorenz to illustrate income distribution.

  • Shows the relationship between population percentage and their corresponding income.

Components of the Lorenz Curve

  1. Horizontal Axis: Percentage of population/families receiving income.

  2. Vertical Axis: Percentage of income received.

Perfect Equality Line (PEL)

  • Represents the ideal scenario of income distribution where income is equally shared among the population.