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Define National Income?
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National Income
| Question | Answer |
|---|---|
| Define National Income? | The income accruing to the permanent residents of a country from current economic activity during a specified period, usually one year. |
| Define Gross Domestic Product? | Is 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. |
| Define Gross National Product? | Ids the total output produced(value of goods & services) by Irish owned factors of production in Ireland and elsewhere. |
| Define Subsidies? | Payments to a producer to help reduce the cost of production(price of the good)/increase output. |
| Define Incomes-in-kind? | Income/rewards received in a non-monetary form or payment made in the form of goods or services. |
| Define Net factor income from the rest of the world? | This is the difference between incomes earned by foreign factors of production in Ireland and sent aboard and income earned by Irish factors of production abroad and returned to Ireland. |
| State the reasons why GDP in Ireland is larger than GNP? | Repatriation of profits by foreign multinational in Ireland, repayment of interest on the foreign element of our national debt, remittances of immigrants in Ireland sent abroad. |
| State the formula for calculating the Gross National Product @ factor cost? | Gross National Product at market prices + price subsidies - indirect taxes |
| State the formula for calculating the Net National Product at factor cost/National Income? | Gross National Product @ factor cost- depreciation |
| State the main uses of National Income statistics? | Indication of alterations in standard of living, means of comparing the SOL in different countries, assists the govt. in formulating policies, evaluate economic policy, EU budget contributions/benefits. |
| State the main limitations of using National Income statistics? | Population changes, inflation, employment/unemployment, levels of taxation, levels of social welfare, measures flow of wealth not welfare, hidden social costs, distribution of national income, exclusion of important activities, nature of the goods. |
| State the relationship between Gross Domestic Product(GDP) @ current market prices and Net National Product(NNP) @ factor cost? | GDP @ current market price +/- Net factor income from abroad=GNP @ current market prices- indirect taxes + subsidies=GNP @ factor cost - depreciation = NNP at factor cost. |
| State the injections into the Circular Flow of Income? | Government spending, investment expenditure, exports. |
| State the leakages into the Circular Flow of Income? | Taxation, saving, imports. |
| Define the injection 'Government Spending'? | All the money spent by the government, both current & capital. It will increase the circular flow of income. |
| Define the injection 'Investment Spending'? | Money invested by individuals, financial institutions and business/spending on capital goods. It will increase the circular flow of income. |
| Define the injection 'Exports'? | Money spent by foreign individuals on goods/services produced within Ireland. It will increase the circular flow of income. |
| Define the leakage 'Taxation'? | A contribution required of persons, groups, or businesses for the support of a government. It reduces spending within the economy and thus reduces the circular flow of income. |
| Define the leakage 'Savings'? | The proportion of income not spent. It reduces spending within the economy and thereby reduces the circular flow of income. |
| Define the leakage 'Imports'? | Money spent by Irish citizens on goods/services produced outside Ireland. It will reduce the circular flow of income. |
| State the factors that influence the size of 'Consumption'? | Levels of income, MPC, availability of credit, rate of interest, rates of (income) taxation. |
| State the factors that influence the size of 'Investment'? | Rate of interest/MEC, expectations of business people. |
| State the factor that influence the size of 'Government Expenditure'? | Political decisions of the government. |
| State the factor that influence the size of 'Exports'? | Income levels, competitiveness of Irish exports, value of the euro. |
| State the factor that influence the size of 'Imports'? | Levels of incomes, MPM, value of the euro. |
| State the five sectors involved in the Circular Flow of Income? | Households, Firms, Government, Financial Institutions, Foreign Markets |
| Define Marginal Propensity to Consume(MPC)? | This is proportion of each additional unit of income which is spent. |
| Define Marginal Propensity to Import(MPM)? | This is the proportion of each additional unit of income which is spent in imports. |
| Define Marginal Propensity to Save(MPS)? | This is the proportion of each additional unit of income which is saved. |
Created by:
deborahh
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