GDP Equations - gross profit = gross sales gross costs or...

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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 = C + S + T + M
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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,
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Unformatted text preview: gross profit = gross sales gross costs or gross sales = gross costs + gross profits so GDP as expenditures = resource costs + other costs + profit so C + I + G + (X M) = w + i + R - NFIA + CCA + SD + profit so GDP as expenditures = GDP as the sources of income Measuring National Income using the income approach: GDP = w + i + R + profit NFIA + CCA + SD Since GNP = GDP + NFIA then GNP = w + i + R + profit NFIA + CCA + SD + NFIA = w + i + R + profit + CCA + SD since NNP = GNP CCA then NNP = w + i + R + profit + CCA + SD CCA = w + i + R + profit + SD Since NI = NNP SD then NI = w + i + R + profit + SD SD = w + i + R + profit National income is equal to the sum of factor payments in the economy, National income = wages + interest + rents + profits...
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GDP Equations - gross profit = gross sales gross costs or...

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