Please enable JavaScript.
Coggle requires JavaScript to display documents.
MEASURING A NATION INCOME, Microeconomics is the study of how individual…
-
- Microeconomics is the study of how individual households and firms make decisions (choices) and how they interact with one another in markets.
- Macroeconomics is the study of the economy as a whole.
- Its goal is to explain the economic changes that affect many households, firms, and markets at once.
- Macroeconomics deals with the performance, structure, and behaviour of the entire economy.
- Every transaction has a buyer and a seller.
- Every dollar of spending by some buyers (households) is a dollar of income for some sellers.
- Circular flow means the flow of money income and the flow of goods and services among different sectors of economy.
- Consumption (C): Household spending on goods and services
- Investment (I) : capital investment spending
-
- Net Exports (NX) : Export and import of goods and services
-
- Only those incomes that come from the production of goods and services are included in the calculation of GDP by the income approach.
- Transfer payments e.g. donation; pension; scholarship; income support for families on low incomes; the unemployed benefit and welfare assistance to singled parent
- Income not registered with the Inland Revenue or Customs and Excise. Every year, billions of pounds worth of activity is not declared to the tax authorities.
- This is known as the shadow economy or black economy.