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19 Cards in this Set
- Front
- Back
National Income |
The income accruing to the permanent residents of a country from current economic activity during a specified time - usually a year |
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Income Method to find GNP at Factor Costs |
GNP @ Market Prices + Price Subsidies - Indirect Taxes |
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Income Method to find National Income |
GNP @ Factor Costs - Depreciation |
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Expenditure Method |
GDP = C + I + G + X - M |
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Production/ Output Method |
Add the value of final goods and services produced. Easily attained from tax records. |
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Precautions for Income Method |
1. Transfer payments are excluded as no FoP has been supplied. 2. Benefit-in-kind included as a payment for labour 3. Contributory Workers' Pension included as payment for past work |
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Precautions for Expenditure Method |
Second-hand-goods: Purchase should be included if the new is not now included |
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Precautions for Output Method |
1. Double counting. 2. Only goods and services counted, ie not housework |
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Net factor income from rest of the world: |
The difference between incomes earned by foreign FoP in Ireland and sent abroad, and incomes earned by Irish owned FoP abroad and sent back to Ireland |
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Subsidies |
Payments to a producer to help reduce the cost of production and increase output. EG: EU pays farmers the single farm payment. |
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Incomes-in-kind |
Income in non-monetary form OR payments made in the form of goods or services |
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Gross Domestic Product @ Factor Costs /@ Market Prices |
The total output produced by the factors of production in the domestic economy, irrespective of whether the factors are owned by Irish nationals or foreigners valued at payments of production/ valued at current market prices |
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Gross National Product @ Factors Costs / @ Market Prices |
The total output produced (value of goods and services) by Irish owned factors of production in Ireland or elsewhere valued at payments to the factors of production / valued at current market prices |
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Why is GDP higher than GNP? |
1. Repatriation of profits 2. interest on foreign element of national debt 3. remittances of immigrants |
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Which is a better indicator? |
GDP is a better indicator of the level of economic activity in the country and GNP is a better indicator of the standard of living |
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Gross National Income |
Is comprised of domestic and foreign income earned by the resident population of a country |
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Uses of National Income Statistics |
1. Indication of altercations to our standard of living 2. Comparative Mechanism 3. Formulating Economic Plan 4. Evaluating Economic Policy |
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Limitations of National Income: |
1. Inflation/ Deflation 2. Employment/ Unemployment 3. Levels of Taxation 4. Level of Social welfare 5. Exclusion of important activities from calculations of NY |
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Problems with the international comparison of N.Y. |
1. Foreign exchange translations 2. Market orientated economics 3. Length of working week 4. Different countries have different needs |