GDP Equations - GDP Equations National Income and Product Accounts GDP = C I G(X M GNP = GDP NFIA NNP = GNP CCA NI = NNP SD PI = NI Income received but

GDP Equations - GDP Equations National Income and Product...

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GDP Equations National Income and Product Accounts: GDP = C + I + G + (X – M) GNP = GDP + NFIA NNP = GNP – CCA NI = NNP – SD PI = NI + Income received but not earned (dividends, government transfer payments, personal interest income) - Income earned but not received (corporate profits, social insurance contributions, net interest, indirect business taxes) DPI = PI – Personal taxes (NFIA = receipts of factor income from the rest of the world - payments of factor income to the rest of the world.) Ways of measuring GDP: 1. GDP as the value of final output: GDP = Σ (P i x Q i ) 2. GDP as expenditures: GDP = C + I + G + (X – M) 3. GDP as the sources of income: GDP = w + i + R + profit – NFIA +CCA + SD 4. GDP as the uses of income: GDP = DC + S + T + M
Measuring GDP as expenditures is equivalent to measuring GDP as the sources of income: For any firm, profit = sales – costs For all firms producing final goods and services in the economy,