- Budget Equation
- Government purchases of goods and services + government transfer payments - government tax and free collection.
- Trade Equation
- Export - Import
- National Income
- Compensation of employees + rental income + interest income + corporate profits + proprietors income
- GDP - indirect business taxes - depreciation - net foreign factor payment
- Disposable Personal Income (DPI)
- national income - personal household taxes + government transfer payment
- National Domestic Product
- GDP- depreciation
- Net National Product
- GNP - depreciation
Gross National Product- GDP + net foreign factor payment
- Budget
- Deficit +
- Surplus -
- Trade
- Surplus +
- Deficit -
- Normal GDP- is the value of out put produced in current year prices (quantity)
- Can increase from year to year if either out put or prices increases
- Real GDP- is the value of out produced in constant or based year prices (adjusted for inflation)
- can increase from year to year only if quantity increases
Deprecation is know as consumption of fixed capital
Use Real GDP to measure economic growth
Use Nominal GDP to measure price increase
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