Tuesday

 

Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed.
PART 8 The Data of Macroeconomics
Chapter 23 of 36 Measuring A Nation’s Income
Section 8 of 15
…
When the U.S. Department of Commerce calculates the nation's GDP every three months it also calculates various other measures of income to get a more COMPLETE PICTURE OF THE ECONOMY.
These other measures differ from GDP because certain income categories are excluded or included.
Five of these income measures are:
·1· Gross national product
·2· Net national product
·3· National income
·4· Personal income
·5· Disposable personal income
…
·1· Gross national product (GNP), is the total income earned by a nation's permanent residents, “nationals.”
It differs from GDP by
· including income our citizens earn abroad
· excluding income foreigners earn in the USA
When a Canadian citizen works temporarily in the United States their production is part of U.S. GDP but is not part of U.S. GNP.
For the United States and most countries domestic residents create most domestic production, so GDP and GNP amounts are close.
2· Net national product (NNP)
This is the total income of a nation's residents (GNP) minus losses from depreciation.
Depreciation is the aging and wear and resulting loss of value on the economy's stock of equipment and structures, such as computers becoming obsolete and trucks rusting.
In the national income accounts depreciation is called the "consumption of fixed capital."
3· National income, is the total income earned by a nation's residents in the production of goods and services.
It differs from NNP by
· excluding indirect business taxes such as sales taxes
· including business subsidies
4· Personal income, is the income households and noncorporate businesses receive.
Unlike national income, it excludes retained earnings, which is income corporations have earned but have not paid to stockholder owners.
Personal income also subtracts from national income
· corporate income taxes
· contributions for social insurance, mostly Social Security taxes
Personal income includes
· interest income households receive from government bonds
· income households receive from government transfer programs including welfare and Social Security
5· Disposable personal income, this equals personal income minus personal taxes and certain nontax payments to government such as traffic tickets.
… …
a more complete picture of the economy
keizai no yori kanzen na zentai-zou

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