Please enable JavaScript.
Coggle requires JavaScript to display documents.
Chapter 2 : Measuring National Output and National Income - Coggle Diagram
Chapter 2 : Measuring National Output and National Income
(1) Circular flow of income
Tell how goods and services move inside economy and how money flow inside the economy
(2) Main player of circular flow of income (2)
Households
Firms
(Slide behind page 3 and 4)
Withdraw + Injections = Market Equilibrium
(3) Gross Domestic Product GDP
The total market value of all
final goods and services
produced in a country for a
given period of time/year
Final goods and services refers to goods and services produced for final used
Example : Consumer goods to avoid double coating
Intermediate good produced by one firm for used in further processing by another firms
Example : Capital / Raw Material to produce other final goods
Y = Income
(4) GDP and the circular flow of expenditure and income
GDP measure the value of production equals to the total expenditure on final goods and total income
The equality of income and output shows the link between productivity and living standard
In equilibrium : Income = Expenditure = Output = Withdrawal = Injections
C= expenditure (buying of domestic goods
(Slide behind page 7)
(5) Calculating GDP (2)
The expenditure approach
Measures the total amount spent on all final product during a given period
Y = C + I + G + (X-M)
The income approach
Measures the income- wages, rents, interest and profit that being received by all factors of production in producing final goods
Firms pay out all of their receipt from the sale of final good so income equals expenditure
Y = C + I + G + (X-M)
Net income & Omission = Adjustment to GDP Calculation
(6) From GDP to disposable personal income (5)
Gross National Product
Equal GDP factor income from the rest of the world
Net National Product
Equal gross national product minus depreciation and a nation total product minus what is required to maintain the value of its capital stocks
National Income
The income after deducting taxes and adding subsidies from government
Personal Income
The income received by households after paying social insurances taxes but before paying personal income taxes
Disposal Personal Income
Income received by households after deducting personal income tax
GDP = Income of everyone who works in Malaysia include foreigner
GNP = Income by all Malaysian who work in Malaysia or Overseas
(7) Standard of Living
GDP = Real GDP / Population
(FORMULA)
The formula do tell us on average how much people earn in the country
Problem that happen or facing by the formula? (2)
Income gap or inequality
Measurement of intangible
Variable
Happiness
Health
(8) Lorenz Curve and the Gini Coefficient
Line of absolute equality = All people earn at the same level of income
The lower the gini coefficient, the more equally distribute income
The higher the gini coefficient, the more unequally distributed income
(Slide behind page 15 and page 16)