Expenditure Approach to GDP/ Income Approach Notes
Focus Question:
1. Indicate whether each of the following is counted in US gross domestic product for the year 2011. Explain each of your answers.
a.) The value of a used textbook sold through an online auction in 2011.
-No, it is a secondhand good.
b.) Rent paid in 2011 by residents in an apartment building built in 2005.
- Yes, it is consumption.
What is the Expenditure Approach?
- C + Ig + G + Xn
What is the Income Approach?
- W + R + I + P + S
How to calculate Budget?
- Govt. purchases of goods & Services + Govt. transfer payments - Govt. tax & fee collection
- positive # = Déficit
- negative # =Surplus
How to calculate Trade?
- Export - Import
- positive # = Surplus
- negative # = Déficit
What Formula do you need to know?
- National Income:
- Compensation + Rental + Interest + Proprietors + Corporate Profits.
- GDP - Indirect Taxes - Depreciation - Net Foreign Factor Payment.
- Disposable Personal Income:
- National - Personal Taxes + Government Transfer
I like your style of notes! It makes the information easier to read and to study off of. I also enjoyed your examples of what can be included or excluded in GDP, it helped me understand GDP calculations better. I think you could add some videos or links to a website explaining how to use the formulas that are given, it would take your blog to another level! Any visuals/pictures would really help as well!
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