According to the fundamental identity of national income accounting, income and output are identical. Why, then, is national income not equal to GDP?
What will be an ideal response?
National income is net of depreciation, while GDP is a gross measure. National income is earned by residents of the economy, while GDP measures the economic activity that occurs on national territory. Thus, income earned by residents as a result of economic activity abroad is included in national income, but not in GDP. Income arising from domestic production that is paid to foreigners, rather than residents, is included in GDP, but not in national income.
You might also like to view...
Which of the following is a source of market power for a monopolist?
a. a firm may have a patent or copyright b. a firm may control critical resources c. a firm may have a government-authorized franchise d. a firm may enjoy economies of scale e. all of the above are sources of market power for a monopolist
Any point inside the production possibility curve is:
a. efficient. b. nonfeasible. c. inefficient. d. optimal.
According to the Keynesian transmission mechanism, an increase in the money supply will __________ the interest rate, causing a __________ in investment, which then __________ Real GDP
A) raise; fall; raises B) raise; rise; lowers C) raise; fall; lowers D) lower; fall; lowers E) lower; rise; raises
A rise in the U.S. price level brings a ________ in the price of U.S. exports relative to imports that ________ exports of U.S. goods, bringing ________ in the quantity of U.S. real GDP demanded
A) fall; increases; an increase B) rise; decreases; a decrease C) fall; decreases; a decrease D) rise; increases; a decrease E) rise; increases; an increase