Important Formulas to Know
- GDP = C + I + G + Xn: The expenditure approach
- GDP = W (wages) + R (rental income) + I (interest income) + P (profits) + S (statistical adjustment): The income approach
- Budget Surplus/ Deficit : gov. purchases + gov transfer payments - gov tax collection
- Trade Surplus/ Defecit; Exports- Imports
- National Income : (Compensation of employees + rental income + interest income + Proprietors income + corporate profits) or (GDP - indirect business taxes - depreciation - net foreign Factor payment )
- Disposable personal Income: National income - personal household taxes + government transfer payments
- Net Domestic product : GDP- Depreciation
- Net national Product: GNP - depreciation
- Gross Investment: Net Investment + depreciation
Depreciation: loss of value in capital equipment due to normal wear and tear
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