Economic Analysis : National Income Essay

1339 Words Mar 4th, 2015 6 Pages
National Income can be defined as revenue earned by the nation’s companies that is measured by the United States Commerce Department and is organized and published by the Bureau of Economic Analysis. National Income relates closely to Gross Domestic Product, or GDP, which is the market value of legal goods and services produced in an economy in a year. Overall, there are two ways that the Bureau of Economic Analysis calculates the GDP; there’s the expenditure approach which uses the formula GDP=C+I+G(X-M). This formula adds together the largest spending sectors, or the sector that consumes the most production. The largest spending sector is described as the household sector who consumes over 2/3 of the production followed by all levels of government spending with the last sector being investment. To further illustrate; household consumption is labeled as C, government spending is labeled as G, investment is labeled as G, and the formula (X-M) is used for the net exports where imports M minus Exports X. The other approach is the Income Approach which adds together all the wages, salaries, rent, interest, and profits totaling the GDP.
In addition, there’s the rate of unemployment, which measures the percentage of employable people in a country 's workforce who are over the age of 16 and have either lost their jobs or have unsuccessfully sought jobs in the last month but are still actively seeking work. Keep in mind that not everyone in the country falls under the employed or…

Related Documents