There 3ways of measuring the national income
-Measure income
-Grows
-Fluctuates.
Also there are 3 ways of measuring gross domestic products (GDP)
The product method
.Double counting-not measuring twice
.Measuring value added-not adding to another
.Gross value added(GVA)
the qualifications:
.stock-income in one way or another
.government services-add up there income-salaries
.ownership of dwelling-national income
.taxes and subsidies production-very high rate.
The income method
.add factors earning: land-profit interest rent/ labour-wages and salaries /capital-profit interest rent.
the qualifications:
.stock appreciation-what comes in
.transfer payments-
.direct taxes-taxes and subsidies on products
The expenditure method
.Y=C+G+I+X-M
.gross national income GNY
.net national income NNY.
We need to take into account some basic things
.inflation-changing prices can confuse us
.population-it matters
.purchasing power (PPP measures)
Also looking at the national statistics
suitable measures of living standards,we have non-marketed items-items excluded
the underground economy-people selling drugs and it is not recorded
externalities-pollution production-poor indicator of welfare.
the production of regrettables-nuclear weapons-maintenance
distribution of income-same size but different income-the poor and the rich.
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