ECON 100B Section 2

Gnp national income depreciation income earned by

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Unformatted text preview: ies) b. State and local government purchases 2. Transfer payments (NOTE INCLUDED IN G) a. Medicare b. Medicaid c. Social Security d. Unemployment Net Exports – Smaller category 2 Joe Milbury Lecture Notes Section 104/108 Spring 2012, Econ 100B Income Approach GDP is income Earned Five main categories 1. Compensation of employees 2. Other income 3. Corporate profits 4. Depreciation 5. Net Factor Income – Counts net flows of countries looking at it by the residents of a country rather than geographic boundaries Five Different Measures of Income 1. National Income = compensation of employees + other + corporate income 2. GNP = National income + Depreciation (Income earned by residents, regardless where the are in the world) 3. GDP = GNP + Net Factor Payments (Within country, but regardless of nationality) 4. Private Disposable Income = GDP + Net Factor Income + Transfer Payments from Government + Interest payments on Govt Debt – Taxes (All money we receive to spend minus taxes) 5. Net Government Income = Taxes – Transfer Payments – Interest payments on debt a. AKA Negative taxes i. Transfer payments ii. Interest payments Nominal Variables – current dollar terms Real variables – adjusted for changes in prices Nominal GDP is what’s actually observed Real GDP is an estimate adjusted to price level (nominal GDP)/price level Three major price indices 1. GDP Deflator – changes in prices, but...
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