Basics Flashcards
An Inquiry into the Nature and Causes of the Wealth of Nations
Adam Smith
The notion of National Income is given by
Simon Kuznets in 1930s
GNP is
GDP plus net factor income from abroad
Net National Product, NNP
GNP - Depreciation (Cost of creating goods and services)
National Income is
the NNP at FACTOR COST
National Income, NI
NNP - Indirect taxes + Subsidies or NNP at FACTOR COST
Gross Value Added, GVA
GDP - Indirect taxes
Output Gap
The difference between Actual - Potential GDP
Per Capita Income
GDP/GNP divided by mid-year population
Imputation
The rental value of all houses is a part of GDP and called imputation
Market Price
Actual transacted price and it includes indirect taxes
Factor Cost
actual production costs at which goods and services are produced by the firms
Market Price is equal to
Factor Cost + Indirect taxes - Subsidies
Transfer Payments
They are a ‘one way’ of money transfer for which no good or service is received in exchange
Pension, scholarships, and UBI are transfer payments.
Subsidies paid to exporters, farmers, manufacturers are not Transfer Payments because they are linked to an economic transaction
GDP Deflator
The ratio of GDP at the current price to constant price
