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1. What is GDP: Gross domestic product-The dollar amount of all goods and services produced within a country's border.
2. How is GDP computed: All the goods and services produced in a 12-month period are multiplied by their price.
3. Why do economist use sampling methods to measure GDP: Because it would be extremely diffucult to compile a complete list of goods and services produced.
4. Why are intermediate products and second hand sales excluded from GDP: Intermediate products are excluded so they are not counted twice; second hand sales are excluded because they do not create new wealth.
5.What are 5 factors to take in account when considering GDP? 1) Reporting Delay 2) Composition of input 3) Quality of life 4) exclusion of non-market activities 5) exclusion of illegal activities
6. What are two aspects of the economy that GDP measures: 1) Performance 2) General Wealth
1. What are five measures of national income: 1) Gross National Product 2) Net national income 3) National income 4) personal income 5) Disposable income
2. How is Gross Domestic Product (GDP) translated into Gross National Product: All payments received outside of the United States are added and all payments made to the foreign-owned resources in the United States are Subtracted.
3. How is GNP translated into Net National Product (NNP): Capital consumption allowances are subtracted from the GNP.
4. How is NNP into National income (NI): All taxes that a business must pay as a cost of doing business, except the corporate profits tax, are subtracted.
5. How is personal income determined: Total amount of income going to an individual before taxes are deducted.
6. How is disposable personal income deter ...